- Raising the 30% tax slab to Rs 35 lakh could ease middle-class financial pressure
- Current Rs 24 lakh slab triggers higher taxes amid stagnant thresholds and inflation
- Salaried earners between Rs 24-35 lakh would benefit from increased take-home pay
With Budget day almost here, middle‑class families staring at shrinking paycheques are desperate for relief. A push to raise the 30 percent slab to Rs 35 lakh could finally give them that breathing room, CA Suresh Surana tells NDTV.
Surana says the proposed hike comes at a moment when salaried taxpayers feel the sharpest squeeze from rising household costs and stagnant tax thresholds. He notes that although the last Budget lifted the effective exemption limit to around Rs 12 lakh and pushed the 30 percent rate to Rs 24 lakh under the new regime, inflation has quietly eroded the impact and dragged earners back toward higher brackets.
Surana explains that shifting the 30 percent trigger to Rs 35 lakh would immediately lift take‑home income for anyone earning between Rs 24 lakh and Rs 35 lakh, postponing entry into the top rate and easing pressure on monthly budgets.
Take a salaried couple, the Sharmas, in Delhi earning Rs 30 lakh a year under the new tax regime, with no major deductions. Under today's slabs, where 30 percent kicks in at Rs 24 lakh, income up to Rs 24 lakh is taxed at lower rates. The last Rs 6 lakh (Rs 24–30 lakh) is taxed at 30 percent, so tax on that top slice alone comes to Rs 1.8 lakh.
If the 30 percent rate started at Rs 35 lakh instead, their entire Rs 30 lakh would fall below the top slab. That same Rs 6 lakh which was earlier taxed at 30 percent would now be taxed at the next lower rate, cutting tax on that slice from Rs 1.8 lakh to Rs 1.5 lakh. The Sharmas keep Rs 30,000 more in hand every year, roughly Rs 2,500 extra in their monthly budget, without any "raise" from the employer.
For the Sharmas, prices of rent, school fees and medical costs have been rising every year, but the tax line where 30 percent kicks in has barely moved. Shifting that line to Rs 35 lakh simply stops the tax system from grabbing a bigger share of a paycheque whose real value is already shrinking.
But if the Rs 35 lakh trigger is not indexed to inflation, a few years of normal price rise will pull the Sharmas right back into the 30 percent bracket even if their real income has not grown. That is the "bracket creep" Surana warns about: slabs that stand still while prices climb quietly push middle‑class taxpayers into the top rate and amount to a form of stealth taxation.
Surana cautions that a one‑time hike will not be enough. Without automatic indexation to CPI or another measurable inflation index, bracket creep will keep nudging taxpayers back into the top slab even when their real incomes are flat. He argues that linking slabs to an inflation gauge would create predictable relief, guard against stealth taxation and remove the need for recurring pre‑Budget appeals.
He frames the Rs 35 lakh proposal as essential for this Budget moment, but says true and lasting protection for the middle class depends on tax slabs that move in step with prices.
