India’s Union Budget 2026 approaches fast. Debates heat up over personal income tax. High earners face steep rates. Experts call for change now.
Under the old regime, income above Rs 5 crore draws heavy taxes. Base rate sits at 30%. Surcharge adds 37%. Health and education cess piles on 4%. Effective rate climbs to 42.7%. This ranks among India’s highest marginal rates ever.
The new regime offers some relief. Base rates drop lower. More slabs appear. Yet surcharge hits 25% above Rs 2 crore. Top earners still pay nearly 39% effectively. Burden remains high.
Deepesh Chheda from Dhruva Advisors warns clearly. High taxes shrink take-home pay. Purchasing power falls sharply. Private consumption slows as a result. Recent buyback tax changes hurt more. Proceeds now face up to 35% tax. Less money flows to spending or reinvestment.
Ashish Mehta from Khaitan & Co agrees strongly. India’s peak rates exceed many countries. Brain drain accelerates. Assets move abroad. Compliant taxpayers feel squeezed.
Developed nations tax high too. They deliver strong returns. Free healthcare arrives. Quality education flows. Public transport shines. Social security protects everyone. India offers less in return. Out-of-pocket costs stay high.
Corporate taxes contrast sharply. Standard rate holds at 25%. Manufacturing gets 15%. Businesses cheer the stability. Personal tax needs similar certainty.
Experts push for smart fixes. Moderate slabs for high earners. Widen the tax base. Use technology and analytics. Simplify compliance. Boost transparency in spending.
Over-taxing a narrow group risks harm. Consumption weakens. Investment stalls. Growth momentum fades.
Budget 2026 holds the key. Government can rebalance wisely. Protect economic growth. Maintain fiscal discipline. Taxpayers watch eagerly. Change could arrive soon.
