In this episode of Editorial, Mr. Sujit Nair discusses the Union Budget 2025-26. He talks about the new tax regime, which exempts taxpayers with salaries up to Rs 12 lakh from paying income tax.
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[00:00:00] Namaskar! Welcome to another episode of Editorial. The government says that this budget is purely meant for the middle class. This is a boon for the middle class is what the government says. The government says that PM Modi and his team has always been thinking of middle class.
[00:00:20] So let's try and figure out whether this is actually going to make a big difference to Indian middle class or not. Let's talk about it. Let's get right into the show. Okay, so the big story is that from 7 lakhs to 12 lakh rupees the income tax is nil.
[00:00:43] So people in the earlier on it was still 7 lakhs. They didn't have to pay income tax now from 7 to 12 lakhs even that slab does not have to pay income tax, which means that one crore people more in India does not have to pay income tax. That's the status. And the government says that this one crore people, especially this one crore people, they are part of the middle class.
[00:01:07] Middle class is around 31% of India's population close to 42 crores of people. This is what middle class is. So the government says that Bawa, listen, you know what, a crore people, we have put them in a slab where they don't have to pay income tax, nil income tax. So we are a government for the middle class. Now before I get into the analysis part of it, let us get into some details.
[00:01:35] Now 10.4 crore people were assessed for taxes in the year 2023-24. This is according to the central board of direct taxes. And around 19.6 lakh crores were collected out of direct taxes in the year 2023-24. Again, I am quoting the central board of direct tax.
[00:02:02] This is the figure. Now in all of this, they say that you see the slab between 7 lakh and 12 lakh, 1 crore people now will not be needed to pay any taxes. Will that help middle class? Of course it will help middle class. 1 crore people, 1 crore people, it helped middle class.
[00:02:22] But, is it going to make that much of a difference to the middle class? The answer is no. It is not something that will change the life of Indian middle class or that will solve all the problems of Indian middle class. It is not going to happen that way. You see, the finance minister has said that the middle class provides strength to the economy.
[00:02:44] In recognition of this contribution, we have periodically reduced tax burdens. I am now happy to announce that there will be no income tax up to Rs. 12 lakhs. This is what the finance minister said. The finance minister says it is the middle class that actually helps the economy, that actually helps the economy grow. Fact.
[00:03:05] That is correct. So you wave away their income tax, what happens is they have got a little more money to spend. Fact. This too is fact. But will that help the middle class? That's a different story altogether. That's a different story altogether. Now let me take you. See, I am a marketing person. Okay. I look at everything from a consumer perspective.
[00:03:31] Let me take you through a consumer perspective. Okay. Consumer A, that is me. I now save a little bit money which I would have otherwise paid as taxes because I fall in that bracket of 7 lakhs to 12 lakhs. Assuming. I save that little money and I keep that money and I say now I can spend. Now I can spend on things that I couldn't spend before. That is what the finance minister expects out of me also. That I spend more in the economy so that the economy is more vibrant.
[00:03:59] No problem. So what happens? Go back to my old story. Where I couldn't afford the caramel popcorn. I couldn't afford that caramel popcorn. So I, when I went with my family to a theatre, I used to buy the regular salted popcorn. Why? Because it was 5% GST. I could afford it. Caramel popcorn? No. 18% GST. I cannot afford it.
[00:04:23] So now I will say that I have got a little money more. No. Why? The government told me not to pay taxes, not to pay direct taxes, not to pay tax on my income. So that money, now I will go and buy my caramel popcorn. And I will pay 18% GST here. The finance minister is offering rebate so that middle class upgrades their life. Upgrades their life, has more buying power. Then they go and buy and pay more GST. So what exactly is happening here?
[00:04:53] Who benefited? Who benefited? What changed in my life? You see, it is not that I am not grateful for whatever the finance minister has done. 1 crore people, taking away, doing away with income tax for 1 crore people. Slab increased from 7 lakhs to 12 lakhs. All that very good. Nice.
[00:05:15] But the fact is, these are not measures that will actually make a difference to the economy. These are not measures that will actually make a difference to my life as a middle class.
[00:05:26] If you really want to make a difference to my life, you please review that 18%. You please review that GST which everybody has to pay. And what is unfair about GST is that everybody pays the same taxes whether that person earns 100 crores a month or whether that person earns 100 rupees a month.
[00:05:51] They pay the same tax. They pay the same tax. For petrol, I pay the same tax when I fill it in my Rolls Royce and I pay the same tax when I fill it in my auto rickshaw. I pay the same GST.
[00:06:07] For the bread I buy the same tax. For the bread I buy in my auto rickshaw. For the bread I buy in the market, a person who buys the bread who is owner of 1000 crore company and a person who buys bread who runs a 500 rupees annual shop, both of them pay the same taxes.
[00:06:24] For the bread I buy in my auto rickshaw. My submission is review GST. Review the way you charge GST. That's where middle class will benefit. You are asking middle class to spend money alright but then what happens next? Again it goes as taxes into the government's coffer. So aisa nahi to aisa. Isn't that the same?
[00:06:51] By removing direct taxes and by ensuring that your GST remains the way it is, you are giving money in one hand and ensuring that he spends from the other. How does the middle class benefit? Where does he save? You see when you are giving a subsidy, when you are giving exemptions, when you are giving rebate, please ensure that that rebate somehow adds up into the savings.
[00:07:20] That is not happening. That is not happening. Because saving will only happen if you can earn more than what you can spend. Now the fact remains that as a middle class, let me tell you madam, the problem with our lives is that we never end up earning more than our expenditure. Our expenditure always seems to be more than our earnings and a lot of it is spent on GST on taxes.
[00:07:49] A lot of it is spent on taxes. Anything good we aspire to buy, anything good we aspire to buy, the GST is enormous. Which means you have cursed us, the middle class, you have cursed us to believe and live a below ordinary life. A below ordinary life because we buy a good car, our GST is more. If we buy a good food, our GST is more.
[00:08:19] If we go to a good restaurant, our GST is more. Which means you have cursed us saying that listen you are middle class, no? You have certain standard. Don't try to go beyond that standard. Don't. You can't because you have to be below that standard. That's the curse that GST has done to middle class. Try and review that curse. Try and ensure that even a middle class can have a standard life. That standard life is what you have taken away from us.
[00:08:50] Like I said, it is not that I am not grateful for this tax rebate. I am. But the fact remains that. Do not make it sound as if it is going to change a middle class life. It is going to change our life for better or it is going to change our life for good or it's a massive difference that it's going to make to our life. Technically speaking, a lot of us middle class will soon realize in the next 6-7 months that it has made actually no much difference to our life. Let us be very clear about this.
[00:09:20] This is the point I wanted to make till I see you next time. That's tomorrow at 10. Namaskar. Stay ahead with our cutting edge news app. Instantly access the latest shots in just one minute and breaking news in just 50 words. Download now for a smarter, faster news experience.