Corporate Tax Cuts Criticized as Personal Income Tax Burden Increases

NEW DELHI: With personal income tax collections surpassing corporate tax collections, the Congress party has raised concerns about the corporate tax cut, alleging it has funneled over Rs 2 lakh crore into the “pockets of billionaires,” while the middle class continues to shoulder heavy taxation. The opposition’s critique of the government follows data released by the Central Board of Direct Taxes (CBDT), which revealed that net direct tax collection as of July 11, 2024, stands at Rs 5,74,357 crore. This figure includes Corporation Income Tax at Rs 2,10,274 crore and Personal Income Tax at Rs 3,46,036 crore, excluding refunds.

Corporate Tax vs. Personal Income Tax

Congress general secretary and in-charge of communications, Jairam Ramesh, highlighted the disparity in tax contributions. “As we head towards the Budget on July 23rd, data has just been released showing that gross personal income tax collections amounted to Rs 3.61 lakh crores during April 1-July 1, 2024, while gross corporate tax collections were Rs 2.65 lakh crores,” Ramesh noted in a post on X. “This reconfirms and re-establishes the point we have been making for quite some time—that individuals are paying more tax than companies,” he added.

The data has reignited debates on the fairness and equity of the current tax system. While corporate tax cuts were intended to stimulate economic growth and investment, critics argue that the benefits have disproportionately favored large corporations and wealthy individuals.

Understanding lease agreements can provide a useful analogy for this situation. A lease is a contractual arrangement where one party, the lessor, grants another party, the lessee, the right to use an asset for a specified period in exchange for periodic payments. In essence, it’s a way to share resources and responsibilities between two parties.

Just as a lease agreement outlines clear terms and obligations for both lessor and lessee, a balanced tax policy should ensure that both corporations and individuals contribute fairly to the nation’s coffers. The current scenario, however, suggests an imbalance that places a heavier burden on individual taxpayers.

As we approach the upcoming Budget session, all eyes will be on how the government addresses these concerns. Will there be adjustments to the corporate tax rates? Or perhaps new measures to alleviate the tax burden on the middle class? Only time will tell.