Finance Minister Nirmala Sitharaman is going to present the new budget a day later. This budget will be the first budget of the third term of the Modi government and the full budget for the financial year 2024-25. It is believed that in this budget, the Modi government can present a roadmap to make the country developed by 2047. Meanwhile, just before the budget, the issue of salaried class taxpayers has again come to the fore.
Tax is already deducted from the salary
Analysts have been arguing for a long time that the salaried class taxpayers are the most exploited in India. It is said in its favour that income tax is already deducted from the salary of an employee doing a simple job, whereas businessmen or farmers earning a lot of money escape the liability of tax. This is the reason why for years there have been demands to give relief to salaried class taxpayers in the tax system and this year these demands have intensified even before the budget.
Government income from direct taxes
The salaried class is the taxpayer class that contributes the most to the government’s treasury. One of the most important sources of income for the government is the collection of direct taxes. In direct taxes, the government earns from individual income tax and corporate income tax. Data released earlier this month shows that so far this year, the net collection of direct tax i.e. net direct tax collection has increased by 24.07 percent to Rs 5.74 lakh crore. This figure is till July 11, 2024.
Contribution of personal income tax in direct tax collection
The equation of contribution to the revenue from direct tax has changed rapidly in recent years. Historically, corporate tax has dominated personal income tax in direct tax collection in India, but now this picture has changed. With the reduction in corporate tax rates in 2019 and the increase in the number of salaried class taxpayers, the contribution of individual income tax has now gone far ahead. According to the data, corporate tax has contributed Rs 2.1 lakh crore to the total direct tax collection so far this year. At the same time, the contribution of personal income tax has been Rs 3.46 lakh crore in the total collection.
You need to earn Rs 21.42 lakh to buy a car worth Rs 15 lakh
A viral article of Times of India is also telling the story of exploitation of individual taxpayers, especially the salaried class. The 4-year-old article published in 2020 gives an example to explain how much a salaried taxpayer needs to earn to buy a car. According to the article, if a salaried taxpayer wants to buy a car worth Rs 15 lakh, then he needs to earn Rs 21.42 lakh for it, because Rs 6.42 lakh goes in income tax. Similarly, to compensate for the fuel cost of Rs 7.55 lakh required to drive a car for one lakh kilometers, one needs to earn Rs 10.78 lakh.
The government earns more profit than car companies
Overall, if a salaried person buys a car worth Rs 15 lakh and drives it for 1 lakh km, then the taxpayer needs to earn a total of Rs 32.20 lakh for it. Interestingly, Rs 18.78 lakh of them goes to the government treasury through various taxes. This means that even if the car is made by a company and driven by a taxpayer, the government earns the most. There is not much difference in fuel prices or tax rates as compared to the year 2020.
Modi 3.0’s first budget will come tomorrow
The new session of Parliament is starting from 22 July i.e. today, Monday. On the second day of the session i.e. on 23 July, Finance Minister Nirmala Sitharaman is going to present the full budget for the financial year 2024-25. Before that, the Economic Review will be presented in Parliament today. As soon as the budget is presented on Tuesday, it will be clear whether the government gives some relief to the highest earning salaried class taxpayers or the trend of exploiting them is going to continue in the future as well.
Also read: Finance Minister will present the economic review on Monday, know how it is different from the budget?
