“A lot of joy about the tax reduction, but …”: Economists warn against relying on the tax of goods and services, he says that the poor hurts me

The Federation’s budget has brought 2025-26 widespread exemptions to the middle class, with Finance Minister Nermalla Sitramman announced significant discounts in income tax. Individuals who get up to $ 12 per year are being exempted from paying the income tax, or a step expected to benefit more than 6.3 rupees, or more than 80 % of the tax base. However, while many celebrated tax relief, prominent economist Ajit Ranadi raised critical questions about the broader effects of this policy.

“Many rejoicing about reducing the income tax, but millions will decrease from the income tax network,” Ranad wrote, noting that the income tax network will decrease from the income tax network, “noting a possible contradiction between the government’s goal of expanding the tax base. And new tax exemptions. According to him, out of 80 million income tax date, barely 25 million payment taxes exceed zero. With an end to the revised exemption that was raised to 12 dollars, 500 % of the per capita income in India, Ranadi argues that there is no other country offering such generous tax exemptions. “This also contradicts the goal of expanding the tax network,” he added.

Ranad highlighted an amazing statistic: “India has only 7 taxpayers per 100 voters,” describing it as not extreme compared to other democracies. He explained that while the tax of goods and services (commodity and services tax) picks a wider part of the population, including the poor, it leads to a retrieval tax burden. “The tax of goods and services, being an indirect tax, declined by its nature. He wrote that the tax of goods and services as a percentage of family income is more higher for the poor than the wealthy, and therefore its burden is declining.” In contrast, direct income tax can be more progressive, ensuring that wealthy individuals pay a higher share of taxes.

Treating the suggestion that India can completely cancel the income tax in view of the groups of goods and powerful services, Ranadi rejected the idea: “The tax of goods and services is retrieving. , Ideally to 10 %. “Currently, the commodity and services tax rates are much higher, with an average rate of 18 % and some tax elements by 28 %. “This is not the way to go,” he confirmed.

Ranadi also challenged the depiction of the growth of the “abundant” commodity and services tax, saying: “The growth of the commodity and services tax is not at all clear. In the past eight years, it has not even growed at the rate of growth of the nominal GDP.” This, as it is believed, raises concerns about the increasing dependence on India on indirect taxes while reducing the base of direct taxpayers.

“Just because goods tax and services are easier to collect, it does not mean that we only rely on it. According to comparisons with international practices, countries like Canada provide commodity and services tax discounts for low -income families to compensate for the retrospective nature of consumption taxes. However, it has also been recognized that the implementation of such measures in India can be impractical and will complicate a already complex tax system.