Ahead of the upcoming Union Budget presentation, finance experts and industry leaders are voicing their expectations, urging the government to address India's high taxation structure, which they say is hurting the middle-class and causing a decline in consumption.
On Wednesday, finance influencer Akshat Shrivastava highlighted the growing frustration among taxpayers, calling for an overhaul of the current approach. "India's high taxation is creating massive dissatisfaction," he said. He stressed the need for a broader tax base and reduced tax rates across the board.
“When things are not working, the government needs to take a different approach. This is fairly common-sensical. Widening the tax base. And, cutting taxes for everyone is the need of the hour,” he said, adding that cutting taxes would give people more disposable income, encourage spending, and reduce the burden on existing taxpayers. "The problem is the political feasibility of such an action. But it is high time someone does it.”
Calls for middle-class tax relief have been growing louder. Confederation of Indian Industry (CII) President Sanjiv Puri has suggested tax relief for individuals earning up to Rs 20 lakh annually. "From the perspective of boosting consumption, we have proposed relief in the marginal tax rate for incomes up to Rs 20 lakh, which would increase disposable income and lead to buoyancy in revenues," Puri said after meeting Finance Minister Nirmala Sitharaman.
A similar demand came from PHD Chamber of Commerce and Industry (PHDCCI) CEO Ranjeet Mehta, who recommended a restructured tax slab. Mehta proposed a 30% tax rate for incomes above Rs 50 lakh and a 20-25% rate for those earning between Rs 15 lakh and Rs 50 lakh.
Former Infosys CFO Mohandas Pai also urged the government to provide relief to long-suffering middle-class taxpayers. Suggesting revised tax slabs, Pai proposed no tax for incomes up to Rs 5 lakh, 10% for Rs 5-10 lakh, 20% for Rs 10-20 lakh, and 30% for incomes above Rs 20 lakh.
"Please give relief to IT-paying honest middle class. Today, the Centre and states spend more than Rs 9,00,000 crore in subsidies for the bottom 60%, but the middle class bears the brunt of taxes, getting poorer and angrier with no relief. The cost of living has become unbearable for many,” Pai said in a tweet.
As the budget nears, the pressure on the government to restructure tax slabs or provide relief to the middle class is mounting.