Income tax and Salaried Middle Class in India

On 1st Feb 2025, our Finance Minister presented her budget and offered a lot of "relief" to the Middle class.

I would like to dig a little deeper into what is the actual scenario on Income Tax.

How is the salaried class treated? Why?

In India - today the Salaried class pays income tax, based on the income slabs, pay income tax. However, when there are many classes of income which are taxed differently.

1. Corporate Income - This is taxed after deduction of all the expenses towards generating that income. They can also set off depreciation of assets, payment of interests, etc. They also can set off the GST paid on what they buy. Also till a couple of years back, they had to pay a Dividend Distribution tax - which is now taxed in the hands of the individual. The tax rates which were in the range of 30%+ are now reduced to ~22%. In some cases, these tax rates are now even lower to 10-15% depending on the government schemes which they qualify. Liability wise, there have almost zero liability. There have been many instances where the promotors have siphoned off the money and looted the public and finally gone bankrupt. Taxes are typically paid afterwards. When they buy some property etc, they can get all the depreciation benefit, expense benefits, maintenance benefits, etc.
2. Farming Income - No tax at all.. Zero, Zilch. Nyet. Here farmers in addition also get free water, free electricity for running their borewells, subsidies on grain, fertilizer, MSPs, etc.. After that, they also get loan waivers. Approximately 60% of the population falls in this bracket. Now the biggest problem with this is anybody who has a farm-land can declare almost any income as farm income without so much as showing proof of how that was really generated. Most of the corruption money - gets routed through this - conversion of black to white. While there are real farmers who are really struggling and committing suicide, the rich ones, the middlemen (who also claim to be farmers) - are the ones who are minting money. These guys have hundreds of crores of wealth, but don't contribute anything towards the economy. Classic example of a minister's grand daughter (aged about 6-8 Years) showed an income of 600 Cr by farming cabbages in her balcony - seriously??? In many cases, they also get free food, ration, etc... We need to start taxing farm income. At least those rich guys will pay. How long will they be freeloaders.
3. Professional Income - In this case, a person not on rolls of an organization is considered a professional. Doctors, CAs, Lawyers, etc... These people also like Corporates, can claim all the deductions of expenses towards generating the income. They can also set off the GST, Assets depreciation, fuel, etc. I know of many people who earn equal or much more than me, but pay only 1/3rd of the Income tax that I pay. We all know that Doctors are going around in their BMWs, Mercs, but the amount of tax paid - pitiful. They also go on those "Conferences" around the globe - promoted by the large Pharma companies.
4. Business Income - Treated similar to Corporate and Professional income. Here also lot of loop holes to evade taxes. Underbilling, over invoicing, high MRPs, etc... Here also a person pays less than 1/3rd the tax paid by a Salaried person for the same income.
5. Finally the Salaried class: These are the people who usually are employed by the above. They get a "Salary" for their services rendered. But now they don't get any deductions, rebates or setoffs. Tax is deducted even before they get their pay check. If the salaried person buys some things - he/she pays it from their already Tax paid amount. Here lets take the case where a person is earning about Rs. 1+Cr per annum. Lets compare it with a professional. While the taxable income of the Salaried person will be 1 Cr+. the professional will show it as only Rs. 30-40. Show all other deductions, and land up paying only 1/3rd of the taxes. Now when salaried person travels, they pay toll - no deductions, this the professionals claim as expenses.
6. Today we see so many houses worth more than 1Cr. being sold in most of the Metros. In Bangalore alone there should be at least 50,000 homes worth more than that. However total number of people in whole of India who paid income tax of more than Rs. 10L was only 70,000 in 2023-24.
7. I would like to identify some things which our FM mentioned. Taxes in 2014 and Taxes in 2025.
8. Since 2014 to 2024 - the CII (Cost Inflation Index) - has increased from 220 to 363. This is 1.65X multiplier to adjust for inflation.
9. In 2014, the IT slabs were <2L - No IT, 2-5L - 10%, 5-10L - 20% and above 10L - 30%. So in today's terms multiply the numbers by 1.65. So before this new budget, ideally Rs. 10L would have become 16.5L, but our IT slabs were 30% from 15L itself without any additional benefits.... So we were at a loss.
10. 2014: Cess - "0". 2024: 4% Health and Education Cess on Income Tax.
11. 2014: Surcharge >1Cr = 10%, 2024: Surcharge = 15%
12. 2014: Deductions - HRA, LTA, 80C, etc. 2024 - 0
13. 2014 - LTCG on stock market was "0". 2024 - 12.5%+4% Cess on Tax.
14. 2014: STCG - 15%. 2024: 20%+ 4% Cess on Tax.
15. 2014 - Interest on 2nd Home - completely exempt. 2024 - No exemption possible.
16. 2014: Dividend - "0" tax in hands of individual, 2024: Dividend - taxed at hands of individual.
17. 2014: Tolls - 100 (Assumed). 2024: Rs. 259 for the same road (compounded 10% annually).
18. 2014: Tax on PF Interest "0". 2024: Tax on PF Interest >2.5L at nominal rates - in my case 30%+

Last year, 30.9% of my total income was Income Tax. In my total income, I don't see almost 12% of my income at all - it gets deducted as PF. So effectively I got in bank the amount of tax that I paid. And above all that - I have paid, GST, Tolls, etc....

So do you really think - after 10 years we are paying lower taxes or more taxes... Think about it....

So why is my right to equality being trampled without any care by every successive governments? This government has only made it worse. There is no job security in private but available in Government jobs.

What I demand - I should be allowed similar treatment as all others. Governments want to treat all asset classes as same - then why not all income classes as same? Either remove Income tax completely for everyone or bring everyone under tax bracket. I am O.K. to pay higher taxes on higher incomes, but then the tax that I pay should be the same as either a farmer or a professional who is earning the same as me. I should also be allowed to set off all my expenses to earn the income. Payment to maids, servants, cleaners, GST, entertainment, travel - to ensure that I am in sane mind to work, tolls, GST, stamp duty, etc. All that should be exempt to the tune of Income tax payable. Allow depreciation of any movable/immovable property purchases by me - to the tune of Income tax that I have paid. This will also help widen the tax base.

Taxing Farm income is necessary. Someone needs to bite that bullet. You cannot keep 65% of public outside tax purview and also allow it for continuing corruption and converting black money to white. If farmers are the "Anna Daata", then we are the "Dhan Daata".

So its high time we revolt back against the government to get us our fair due. Get back our right to equality. Imagine only a few lakh people are actually paying income tax. If these people decide to settle outside India - then what???