10-20-25% Tax Slabs: Fund Manager’s Bold Proposal to FM Sitharaman for Budget 2025

As the countdown to Budget 2025 continues, Gurmeet Chadha, Chief Investment Officer at Complete Circle Wealth, has proposed a dramatic overhaul of India’s tax structure. In a direct appeal to Finance Minister Nirmala Sitharaman, Chadha urged for a simplified tax system with lower rates, arguing that better compliance would ultimately boost government revenues.

A Radical Tax Overhaul?

In a post addressed to the finance minister, Chadha suggested a bold restructuring of tax slabs:

10% tax on income above ₹10 lakh
20% tax on income above ₹20 lakh
25% tax on income above ₹30 lakh

“If people still don’t want to pay 25%, hunt them down. Use technology. Let’s not burden honest taxpayers more,” he remarked, advocating stricter compliance measures.

Beyond Income Tax: Housing, LTCG, and Farmers

Chadha also proposed additional measures to ease the financial burden on individuals and promote economic growth:

5% interest rate on home loans up to ₹50 lakh to make housing more affordable.
Uniform 10% long-term capital gains (LTCG) tax across asset classes with a reduced holding period of two years.
Special incentives for farmers to diversify into non-farm activities, boosting rural incomes.

“With some lag, revenues of the government will actually go up on better compliance,” he asserted.

Experts Call for Tax Cuts

Chadha’s proposal aligns with growing calls for tax relief. Surjit Bhalla, former IMF Executive Director, recently criticized India’s high taxation levels. “We are overtaxing our people to an extent not known in any other country,” Bhalla told NDTV.

He pointed out that India’s tax-to-GDP ratio exceeds 19%, compared to 14.5% in East Asian economies like China and Vietnam. “Why are we at the level of Korea and the US? They are about 10 times richer than us,” Bhalla questioned, emphasizing that lowering taxes could drive higher economic growth.

Other Industry Suggestions

Several industry bodies have also recommended tax revisions:

The Confederation of Indian Industry (CII) has suggested tax cuts for incomes up to ₹20 lakh.
PHDCCI CEO Ranjeet Mehta proposed a 30% tax rate for incomes above ₹50 lakh and a 20-25% rate for incomes between ₹15 lakh and ₹50 lakh.
Mohandas Pai, former CFO of Infosys, suggested a tax-free slab up to ₹5 lakh, followed by 10% for ₹5-10 lakh, 20% for ₹10-20 lakh, and 30% above ₹20 lakh.

What’s Next?

With Finance Minister Sitharaman set to present Budget 2025 on February 1, taxpayers and industry leaders eagerly await potential reforms. Whether Chadha’s bold 10-20-25% tax structure or other expert recommendations will shape the budget remains to be seen.

Stay tuned for further updates on Budget 2025 and its impact on India’s taxation landscape.