Comprehensive Tax Overhaul Promised by Congress Party
In what appears to be a direct challenge to the current BJP/NDA government’s fiscal strategies, the Congress Party has pledged a radical transformation of the Indian tax landscape. The party’s Election Manifesto for 2024 has taken a critical stance on the taxation policies of the last decade, which they describe as “taxation gone berserk.” They assert that the common person and the poor have been disproportionately affected by a surge in regressive indirect taxes, while corporate tax contributions have seen a decline, contradicting the ideals of a progressive tax system.
The manifesto criticizes the stagnation of India’s tax-to-GDP ratio despite efforts like demonetisation and GST implementation. It suggests that this has hampered the potential for increased public spending. In response, the Congress Party is proposing a Direct Taxes Code, which promises to bring transparency, equity, and impartiality to tax administration. This includes maintaining stable personal income tax rates to aid financial planning for the salaried class.
One of the more notable pledges is the abolition of Angel Tax, which has been a point of contention for investors in new ventures. By eliminating this and other burdensome tax schemes, Congress aims to foster growth in micro, small companies, and start-ups. The manifesto also outlines plans to reduce the tax load on MSMEs that are individually or partnership-owned.
At the heart of their proposed reforms is GST 2.0, a reimagined Goods and Services Tax structure advocating for a single, moderate rate to alleviate the pressure on the poor, with exemptions for agricultural inputs. The restructuring of the GST Council is also on the agenda to ensure policy autonomy. Moreover, local bodies like panchayats and municipalities are set to receive a share of GST revenues.
Small retail businesses, currently facing fierce competition from online entities, can expect significant tax concessions under Congress’s plan. Additionally, the manifesto emphasizes the independence of judicial bodies such as ITAT and GSTAT from government influence.
The Congress Party’s vision for taxation reform is clear: to create a system that is fairer and more efficient. With these proposed changes, they aim to rectify what they see as inequalities and inefficiencies in the current tax regime, setting the stage for a potential shift in India’s economic policy should they ascend to power.
