Srinivas Kamat
The Income Tax review of slab rates and the exemption from Income Tax for those earning up to Rs. 12.65 lakhs per annum in the 2025 Budget is being made out as a big thing and Narendra Modi and Nirmala Sitharaman are going full blast to garner publicity for offering this concession. As a condescending measure to the middle class, this is being done who for long have borne the brunt of the government’s heavy handed taxation policies. They fully deserve these sops given to them. But those paying income tax in the country, are about 8 crore people of which approximately 50% file Nil Tax Returns. Thus the concessions as above apply to only about 4 crore people which is just about 2.5% of the 140 crore Indians. It is therefore very much limited in scope and benefits a very small minority and therefore nothing to crow about and go to town with. With prevailing prices increasing by the day in our economy and with inflation on the rise, everyone deserved concessions or measures to reduce prices making their cost of living lower. But this is precisely what the 2025 Budget has not been able to address. Those who are suffering because of high prices in the economy will continue to do so and there is no relief for them. Measures that sweep across the board to reduce prices would have been desirable for which the present government neither has the imagination or the guts to do it.
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Even the concession given on Income Tax has been given because of the buoyant GST collections which over the last few months has been hovering around Rs 1.7 lakh crores. Thus the government can afford to make concessions. However, if the intention was to give the benefit of reduction in prices to all sections of our society, then GST for all items could have been brought down by 5%. This would also combat the rising spectre of inflation. The middle class, long suffering that they have been, would not mind not getting the Income Tax rebates since the GST reductions would have more than compensated for what they would be losing. Here again, the government does not have the guts to touch the GST cash cow since who would like to tinker with lots of money flowing in.
Again any review of GST slabs in this financial year are out of the question because the government would stall it claiming that they have already reduced the Income Tax. The GST has become like a viral disease affecting all walks of life of the common man. It is all pervasive. Tomorrow for the air that we breathe including the polluted one in our cities, there could be a GST on it. For stepping out on the streets, there could be a GST. As said earlier, the vision, imagination and guts required to bring broad based structural reforms to the economy and give it a boost are missing with this government since the people involved in its formulation are either timid or lack the understanding of what is to be done.
They are capable of only tinkering like increasing the limit of Bank Interest earnings or raise the limits of rental income to avoid deducting TDS. This is the extent that Nirmala Sitharaman can go and nothing beyond, tight-fisted that she is and thinking she is running her household budget not realising that it is the country’s Budget that she is responsible for. As far as Modi’s understanding of finance is concerned, it was aptly summarised in a cartoon where he is shown coming back after talking to Donald Trump in the US and saying – Trump Saab to hamari tareef aur tareef hi kar rahe the! While Trump was ranting away that he would impose tariffs and more tariffs on India! This is the state of our nation, wrong emphasis, wrong policies, wrong initiatives. No wonder we are heading downhill to disaster economically speaking.
