'Middle class doesn't even register in...': Tax relief demands gain momentum before Budget 2025

As the countdown to Budget 2025 begins, voices calling for tax relief for the country's middle class are becoming increasingly vocal. A recent post by an X user has stirred a conversation about the struggles faced by this crucial segment of society, which, according to the post, is largely overlooked in national discussions.

“If you really look at it, alongside soldiers, doctors, and teachers, the real Nationalists are the middle-class Indians between the ages of 20 and 45, who have stayed back in India,” the user stated. “People in this age bracket could have easily gone abroad had they wanted to, stayed there, make once-in-2-year India trips armed with bulk chocolates bought from Walmart and showed off...but they stayed back, fought the tough fight, and chose to take this thankless uneven path, because most of them genuinely wanted to contribute to our country’s progress.”

The post highlights the unappreciated role of this middle-class demographic, which forms the backbone of India's economy. However, despite their contributions, the post argues that they remain invisible in national conversations. "Unfortunately, this lot doesn't even register in our national consciousness. Nobody talks about them and nobody cares for them. If you ever want (to) look for a group of people who are underappreciated, this is it."

This frustration has now been echoed in calls for tax reforms, particularly ahead of the upcoming Budget. Experts have pointed out that the middle class continues to bear the brunt of India’s high taxation without significant relief over the past decade.

Finance influencer Akshat Shrivastava recently argued, “India’s high taxation is creating massive dissatisfaction.” He called for a broader tax base and reduced tax rates across the board, suggesting that “cutting taxes would give people more disposable income, encourage spending, and reduce the burden on existing taxpayers.”

Sanjiv Puri, President of the Confederation of Indian Industry (CII), has also joined the chorus, recommending 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 stated after meeting Finance Minister Nirmala Sitharaman.

Ranjeet Mehta, CEO of PHD Chamber of Commerce and Industry (PHDCCI), has suggested restructuring the tax slabs, proposing 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.

The plea for middle-class tax relief has found additional support from former Infosys CFO Mohandas Pai. In a tweet, Pai highlighted the disproportionate tax burden borne by the middle class, stating, “The cost of living has become unbearable for many...Please give relief to IT-paying honest middle class.”

Pai further suggested revised tax slabs, including 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.

With the middle class often feeling left behind, experts believe that the upcoming Budget could be a chance to address these concerns. “When things are not working, the government needs to take a different approach,” said Shrivastava, urging policymakers to widen the tax base and bring in more inclusive, equitable fiscal reforms.