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Prioritize Tax Cuts For Individuals, Not Corporates: Former IMF Executive Highlights India’s High Tax Burden

Former IMF Executive Director Surjit Bhalla has made a compelling case for reducing personal income taxes ahead of the Union Budget 2025.

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Prioritize Tax Cuts For Individuals, Not Corporates: Former IMF Executive Highlights India’s High Tax Burden


Former IMF Executive Director Surjit Bhalla has made a compelling case for reducing personal income taxes ahead of the Union Budget 2025. In an interview, Bhalla emphasized the need to prioritize tax relief for individuals rather than corporations.

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“First, change our FDI policy. Second, cut personal income tax rates. The taxes are too high,” Bhalla stated. He added, “Corporate tax cuts benefit corporations, but personal tax cuts are what the people truly need.”

Bhalla pointed out India’s tax-to-GDP ratio of 19%, significantly higher than the 14.5% average in East Asia. He highlighted the discrepancy between India’s per capita income and that of countries like the US and Korea, questioning why India maintains a similar tax burden.

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Boosting Revenue Through Tax Cuts

According to Bhalla, reducing personal income taxes could actually increase government revenue.

“If you cut tax rates, your revenue goes up. This allows for greater infrastructure spending and welfare payments,” he argued. Bhalla dismissed concerns over funding gaps, citing examples of other nations that manage fiscal challenges effectively.

Calls for Restructuring Tax Slabs

Several industry leaders and economists have echoed Bhalla’s views:

  • Confederation of Indian Industry (CII) President Sanjiv Puri suggested tax cuts for individuals earning up to ₹20 lakh annually to boost consumption.
  • PHDCCI CEO Ranjeet Mehta recommended restructuring tax slabs, proposing a 30% rate for incomes above ₹50 lakh and a 20-25% rate for those earning between ₹15 lakh and ₹50 lakh.
  • Former Infosys CFO Mohandas Pai advocated no tax for incomes up to ₹5 lakh, 10% for ₹5-10 lakh, 20% for ₹10-20 lakh, and 30% for incomes above ₹20 lakh.

The Success of 2019 Corporate Tax Cuts

Bhalla highlighted the success of the 2019 corporate tax cuts, asserting that further reductions are unnecessary. Instead, he emphasized the critical role of personal tax cuts in boosting consumption, increasing disposable income, and driving economic growth.

Finance Minister Nirmala Sitharaman is set to present the Union Budget on February 1. The focus on personal tax reforms, as advocated by Bhalla and other experts, may play a significant role in shaping fiscal policy and addressing India’s economic challenges.

Read More : Union Budget 2025: Meet Finance Minister Nirmala Sitharaman’s Core Team

Filed under

Budget 2025

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