“We are a much more globalized economy in the world and the world is much more globalized. If you look at the overall tax rate structure in India, tax collection is one of the highest in the world and we are not not the richest economy in the world,” Bhalla said.
He said that the collection of taxes by the state, center and local bodies accounts for about 19% of India’s GDP.
“We should go for a reduction of 2 percentage points. Regarding direct taxes, I think the overall tax rate should not exceed 25%. Currently it is close to 40 with surcharges etc. 25%, which is our corporate tax rate, that’s what our income tax rate should be,” Bhalla said.
Currently, the highest income tax rate in India is 39%. The 2023-2024 budget had lowered India’s top income tax rate by 42.74%, by reducing the surtax applicable to high net worth individuals.
Bhalla said taxes must be reduced for all and not only benefit a narrow section of society.
India’s gross direct tax collection in the last financial year ending March 2023 increased by more than 20% to Rs 19.68 lakh crore. This includes a gross growth in corporate tax collection of 16.91% to over Rs 10.04 lakh crore. Gross personal computing collection jumped 24.23% to over Rs 9.60 lakh crore.
Bhalla said direct tax is one of the areas where there is a lot of bureaucratic involvement and should be much more streamlined to minimize tax evasion.
“You can’t minimize tax evasion without doing something about the very, very high income tax rates. We need to change the tax structure so that everyone benefits rather than selected sectors,” he said. -he declares.