Industry’s demand rising for tax waiver up to `50L

Industrybody PHDCCI made a case for substantially reducing the income-tax rates for individuals earning up to Rs50 lakh annually, and levying the highest rate of 30 per cent only on those earning more.

The highest tax rate of 30 per cent is levied on individuals earning more than Rs24 lakh in a year in the new Income-Tax regime. In its pre-Budget recommendations submitted to Revenue Secretary Arvind Shrivastava, besides a raft of reforms in the direct tax regime, the industry chamber also made several recommendations on the indirect taxation front. The government has started the process for the presentation of the next Union Budget. Finance Minister Nirmala Sitharaman is scheduled to present it to Parliament in February.

One of the major suggestions on the direct taxes front is request for reduction in rates of taxation for individuals, partnership firms and limited liability partnership. PHDCCI said the corporate tax rates have been reduced to 25 per cent, including surcharge.

“In spite of the fall in Corporate Tax rate from 35 per cent (approx) to 25 per cent, the corporate tax collections have increased from Rs6.63 lakh crore in 2018-19 to Rs8.87 lakh crore in 2024-25, thereby showing a substantial increase. This clearly shows that moderation of tax rates has resulted in more compliance and an increase in tax revenues,” it argued.

It further said the personal tax rates have the highest slab of 30 per cent, and with surcharge ranging from 5 per cent to 25 per cent, the peak of tax rate reaches 39 per cent in some cases. “The taxpayer is burdened with this high tax rate where 40 per cent of his/her income goes to the government and the balance 60 per cent is left for self-consumption,” the chamber said.

In the representation, the chamber also highlighted the benefits and facilities that taxpayers get in developed countries.

“It is requested that the maximum tax rate for income up to Rs30 lakh should be 20 per cent and from Rs30 lakh to Rs50 lakh should be 25 per cent and beyond Rs50 lakh it could be 30 per cent which will not only increase compliance and tax buoyancy but also lead to major relief to the middle class,” it said.