Can income tax in India ever be “almost zero”?
Finance Minister Nirmala Sitharaman said Tuesday she wished that could be the case, but given the size of economic challenges facing India, including paucity of funds for research purposes, this is not likely to anytime soon.
“There are times when being the Finance Minister doesn’t give me motivation… when I have to answer ‘why are taxes so high… why can’t they be lower’. I wish I could bring it down to almost zero but India’s challenges are severe and (money is needed) to overcome these.”
Ms Sitharaman – who last month presented the 2024 Union Budget in Parliament, and was criticised for not offering breaks to salaried taxpayers, apart from a 50 per cent increase in standard deduction under the new tax regime – was speaking at a graduation ceremony at the Indian Institute of Science Education and Research (IISER) in Bhopal.
The Finance Minister began her 40-minute speech by congratulating IISER for the number of degrees awarded and filing for eight patents, as well as being granted nine others.
She called on the graduating scientists to help propel India as a scientific powerhouse, with particular emphasis on developing technology to help harness and store renewable energy.
It was in that context that Ms Sitharaman spoke personal taxes.
“The challenge in meeting climate goals set at COP 21 and 27 (referring to the United Nations Climate Change Conference), and subsequently in the UAE and Scotland… India made a lot of commitments to move towards renewable energy… is money.”
“The world promised a lot of money to help transition from fossil fuels to renewable energy… but that money has yet to come. But India didn’t wait. We put our own monies… promises given in Paris have been fulfilled with our own money,” she stressed.
To that end she urged the assembled students to work towards patenting new or improved climate friendly technology. Such technology must then be brought to the use of society at large, she said, “Encouraging science for its own sake and societal benefit is crucial.”
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Last month Ms Sitharaman, in addition to increasing SD for new regime taxpayers, also widened slabs. As a result, she told Parliament, salaried people can save up to Rs 17,500.
READ | Will Old Tax Regime Be Scrapped Next Year? What Finance Minister Said
Changes to income tax slabs – old and new – were in focus ahead of her speech as the country’s mammoth middle class clamoured for relief from tax burdens. There had been little joy for the middle class in the interim budget – which pegged gross tax revenue at Rs 38.31 lakh crore for 2024-25, an 11.46 per cent growth over the last fiscal.
Ms Sitharaman, however, had to walk a tight rope as she sought to stimulate growth and provide relief.
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