Mohandas Pai, chairman of Aarin Capital and former CFO of Infosys, has urged Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to provide significant tax relief to middle-class taxpayers in the upcoming Budget 2025-26. Highlighting the financial strain faced by the middle class, Pai stressed that rising taxes, coupled with high costs of living and education, have caused "great distress" among NDA voters.
In a post on social media platform X, Pai wrote, "Very high growth in IT/CT collection for the third year. [It] will be higher than [the] budget again. Time for @FinMinIndia @nsitharaman to give relief, simplify, and reduce taxes on long-suffering middle-class taxpayers."
"PM @narendramodi Sir, please give relief to [the] middle class in [the] budget 25-26 suffering high taxes, high EMI because of high vegetable prices — Tomato, Onion, Potato prices based on 2011-12 weights, [and a] massive increase in school and college fees over [the] last three years. Great distress amongst middle-class NDA voters."
Pai's remarks come as the government's net direct tax collection for the current fiscal grew 15.88% to Rs 16.90 lakh crore, surpassing expectations. Gross direct tax mop-up from April 1, 2024, to January 12, 2025, increased by 20% to over Rs 20.64 lakh crore. This includes corporate tax collections of Rs 7.68 lakh crore and personal income tax revenues of Rs 8.74 lakh crore. Refunds worth over Rs 3.74 lakh crore have also been issued during this period, marking a 42.49% rise from the previous year.
The former Infosys CFO noted the sharp growth in individual tax collections, pointing out that collections rose from Rs 4.87 lakh crore in 2020-21 to Rs 10.45 lakh crore in 2023-24, representing a 114% increase over three years. "[For] 2024-25, gross individual IT collection [is] up by 22%, [and] net may reach Rs 12.5 lakh crore," he stated.
In a similar appeal earlier, Pai urged the central government to restructure tax slabs, proposing that no tax be levied on income up to Rs 5 lakh, a 10% tax for income between Rs 5 lakh and Rs 10 lakh, 20% for income between Rs 10 lakh and Rs 20 lakh, and a maximum of 30% for income above Rs 20 lakh. He also recommended raising tax thresholds for senior citizens, with taxes starting at Rs 7.5 lakh for those over 60 and no tax on income up to Rs 10 lakh for those over 70.
Pai's suggestions include eliminating all deductions except for Sections 80D (medical insurance) and 80G (donations), with the scheme offered as an option to simplify the current complex tax system.
This growing demand for middle-class tax relief comes against the backdrop of high inflation and increased costs of essential goods and services. With the Budget 2025-26 set to be presented soon, Pai's comments reflect a growing sentiment among middle-class taxpayers for immediate government intervention.