[nakul0888]

Id go for a third option.

Cut spending, and cut both taxes.

max 25% income tax, max 25% GST as indirect tax. This is reasonable.

If the govt cannot restrict its spending with the collection from above, then look within itself for solutions. Don't pester the private sector.

[NPV]

Obviously fuel tax reduction helps more people and also to keep price rise/inflation of essential commodities in check. Reduced income tax will only help a small percentage of our population who pay income tax (5 crore people ?).

Not surprisingly, the poll results are overwhelmingly in favour of income tax reduction , Team BHP members are all income tax payers!

[Turbolove]

A reduction in income tax would benefit me personally and allow me to absorb the increasing prices of fuel and other commodities, if a reduction in fuel tax would result in the reduction of fuel prices directly, that would directly help a far larger group of people in the country.

[punto_]

I’ve voted for removal of income taxes though that’s not ideal.
Salaried employees will always end up paying taxes and all the other indirect taxes on top of it. And I’m not 100% confident govt is serious or has the capability to tax everyone in the right way. So the short term goal from my point of view will be to reduce/remove direct taxes.

[Quoter]

There are multiple aspects to be considered here. First is the point on what is the right way to tax for an economy:
- Fuel is an imported polluting good. Definitely does not deserve a reduction in tax.
- However, there needs to be equal investment in improving public transportation and encouragement needs to be given to walking and cycling by building / clearing encroachments on footpaths as well as dedicated cycle paths
- Income tax does not really have to be lowered. However, the tax slabs at the top level have not been increased for so long that the entire tax range is in a small band of 5 - 10 lakh. There is a need to link tax slabs with inflation so that every year the tax slabs go up according to the CPI for that year. Not changing tax slabs is a way to increase taxes every year as wages go up with inflation

The other aspect is implementation:
- Extremely easy to ensure compliance with taxes on fuel. Everyone is 100% compliant
- Impossible to ensure compliance with income tax rules. Everyone is looking for ways to reduce tax outgo. Hence, the need to simplify taxation rules.
- Our corporate tax rate is at 25% while the peak personal income tax rate is close to 35%. On top of it, promoter driven businesses get the option to bill everything as a business expense. On the other hand, salaried individuals go through double / trips taxation on their income and expenses. This is clearly a gap which needs to be bridged.

Having said all this, politics trumps all. Income tax payers are a small minority and the vast majority of non income tax payers are more than happy to exploit this minority as much as possible. All the arguments of indirect taxation, GST etc. being regressive taxes are ideal theoretical studies based out of countries with a high degree of tax compliance supported by government funded social security. Given that we have neither in India, indirect taxation is probably the only way to get everyone to pay their due share of taxes.

[Siddarth_Ramani]

Govt should completely do away with Income taxes. Indirect taxes are already high. Progressive taxation is against individual growth. Most of the income tax payers are salaried class. Why should a person who hustled to earn every penny he's making pay more taxes? Is it a punishment for working hard? Is this what the govt wants? To keep everyone in the never ending circle of life called middle class?

Govt should focus more on efficient utilisation of collected taxes rather than raising fuel taxes every full moon. There's a limit as to how much they can raise fuel tax.

[OrangeCar]

Originally Posted by GTO

Mod Note: Poll added to spice things up .

Why is it only Fuel tax OR Income tax reduction option only. Why not both?

Isn't an efficient government one that provides all possible services in the best possible manner, by charging the least amount of taxes?

Why cannot I wish for both - reduction in Income tax and Fuel tax? If you think it is unrealistic in a country like India because of its myriad issues; then the very concept of asking for a tax reduction is unrealistic. So, as long as we are being unrealistic, why not ask reduction in both taxes.

I mean, it is not like, I go to the fuel pump and say, 'oh.. there has been a reduction in IT, so let me shell out exorbitant fuel tax'. Similarly, if fuel taxes were reduced, it is not like I would say, 'Yay, less fuel tax, let me pay huge IT.'.

As a citizen, I want to pay the least amount of taxes to one the most inefficient and bloated institutes in the world - government (specifically, of India - states, central, local, etc). I want to pay less fuel tax, IT, GST, etc. And I want zero cess whatsoever.

Now, those people who think it is not wise to reduce taxes, because of many issues in India, and things are slowly improving (basic infra, education, health, etc) we should keep paying taxes; say that to yourself when you see a local official (like a BBMP officer, senior police officers, etc) travel in a government provided Innova or Fortuner. Because a government provided Swift / i20 etc will not meet their stature. You pay taxes to such things too!

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PS: What a rant!

[PRS7]

I would like to propose a solution, where secondary taxes of GST on purchased to be waived off for income tax payer, if it is purchased directly by him/her enabled with biometric security so that it is not misused. This should be subject to a cap commensurate to the income tax paid by the individual.

[gauravdgr8]

Voted for reduction in fuel taxes.

Why?

Bring fuel under GST and make it uniform across the country. Be it 28% or 40%, but make it uniform. This way the price disparity is removed. As things progress, GST can be reviewed.

Income tax reduction can be catastrophic as seen in Srilanka. We don't want to tread that path. I am happy paying 30% rather than seeing my assets turning to peanuts or having to migrate to a better land.

[John Jacob13128]

Originally Posted by wildsdi5530

Direct taxes, which comprise income tax paid by individuals and corporate tax, came in at Rs 14.10 lakh crore during April 2021 to March 2022. Now a huge chunk of this would be given back as tax refund. And corporate taxes though lower rate is still a big chunk. So Probable revenue after deductions from personal Income Tax is probably 2 Lakh Cr.

On the above statement, the NET Tax collected under PIT (Personal Income tax) and STT (Security Transactions Tax) came in at 6,40,588.3 crore (net of refund).

And the Corporation Tax (CIT) at Rs. 7,19,035.0 crore (net of refund).

As per the Press release - Net collections are at Rs. 13,63,038.3 crore compared to Rs. 9,18,430.5 crore over the corresponding period of the preceding financial year i.e FY 2020-21, representing an increase of 48.41%.

So even though the Tax paying base is low in India, it does represent a good chunk to the coffers. A way forward is to tinker with the Tax slabs and Standard deductions for PIT and try taking the CIT to its old levels (wishful ?)

[ShreyG]

I voted for income tax reduction. Sole reason being that there is a clear alternative to it, expenditure tax. It was an idea floated by Subramanium Swamy.
Note : Views of an economic newb who just wants best with the tax paid
As I understood, it we need to tax on the expenses of people rather than their income. As it is, the population does pay indirect taxes in the form of GST, VAT etc. Increasing it by 25% (5% slab goes to 6.25%, 12% goes to 15% and so on) should be able to curtail the shortfall and losses incurred due to loss in IT for the government. To break it down, a product costing Rs 100 exclusive of tax would cost Rs 115 rather than Rs 112 ( considering 12% GST bracket ).
Now, of course, this would be a disaster politically since the massive chunk of non tax paying population would end up paying more for the same product. Financially, it will bring each and every person into the tax paying purview and could also lead to a higher tax collection. On the contrary, this move would increase the purchasing power of only the tax playing class and may reduce demand of products (which itself is not the best right now)
Tax reduction on fuel, on the other hand, may lead to an increased demand and could be offset by increasing oil prices.
One way to think of income tax would be like a subscription fee you pay to the guv in return for services (roads, electricity, clean water, safety, social security, medical, education, subsidized travel etc). However, in our country, with the sole exception of security i.e. army, navy, air force and the like ( not the police ) and perhaps subsidized rail and postal service, we do pay for each and every service separately ( and probably don't get the best product e.g. Bangalore roads ). Moreover, there are taxes on interest incomes from investments we have made from our post tax incomes and now as I write this post and think of it, income tax paid is well and truly not the money's worth and I close to moving into the rant mood.

[amitayu]

Voted for reduction of fuel taxes.

Fuel prices have multiplier effects that drive up inflation. A reduction in fuel price can help reduce overall price levels across the economy.

Reducing income tax to raise disposable incomes is a classic money illusion; you think you are more empowered with more money in hand, but if inflation rates are high, you are often poorer despite having more cash in hand.

Ideally, fuel too should be under the ambit of GST. There is no economic logic for not covering fuel under GST.

[AGupta]

Since I don't have voting power so listing my choice below.
Reduction of Fuel Taxes: Since it affects everything. The prices of groceries, construction of houses, etc is at an all-time high. There is a large population that does not have any stable source of income, the fuel prices hurt them more.

[poloman]

A better way to provide relief is to increase the exemptions. For example if some one is buying a car, a person is spending close to 40% as tax as demonstrated in a thread recently. If some one is boosting consumption and paying huge tax on the already taxed income to govt in form of road tax, GST etc, it is imperative to provide some tax relief. Again the person will be paying emi and there also no relief on the interest component. If businessmen can be provided huge tax and depreciation benefits, why not for salaried?

That said, the financial well being of the Government of the day is very important for us to enjoy the fruits of our wealth. As demonstrated in Countries like Greece, Venezuela, SriLanka, Nepal etc.. populistic policies can ruin the economy of the country and the wealth we have will have no value or meaning.

Have fuel available at higher prices is more important than no fuel at all. A country which imports 90% of oil has no choice.

[VALLURIS]

I am a newbie so can’t vote.

My choice would be to reduce tax on fuel. More than the tax on fuel if additional CESS is removed it will be a huge relief.

We are paying Rs.32.90/litre cess which includes basic excise duty of Rs. 1.40, Road & Infrastructure Development Cess of Rs.18, Agriculture and Infrastructure Development Cess of Rs. 2.50 and Special Additional Excise Duty of Rs.11.

Since we already pay lots of tax directly or indirectly it would be a relief if government completely remove the CESS from all taxes.