Income Tax slabs should be linked to Inflation

Income Tax slabs should be linked to Inflation

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Petition to
Nirmala Sitharaman (Defense Minister of India) and

Why this petition matters

Started by Honest Taxpayer

Background: India has chronic high inflation. We have seen highs of 10%+ for multiple years between 2000-2010. Over the last 10 years it has averaged at 6%+ mark (refer attached image).

Our costs increase year after year but salaries don't keep pace. The bigger mockery, however, is that even Income tax slabs remain untouched year after year. This is criminal to say the least.

In last 10 years, slabs by staying static have caused additional tax outgo of 9 Lacs for salaried individuals. This amount will only increase year after year and infact grow in a compounding manner.

Rationale for Ask:

  1. If our costs are impacted by inflation, it is only fair that income taxes should also be inflation linked
  2. Indirect taxes are also inflation linked - year after year costs increase and indirect tax outgo from our pocket increases, keeping direct tax slabs unlinked with inflation is a double whammy on salaried class
  3. Inflation is anyways severely underestimated for Salaried Class. CPI has 36% weight for Food, 21% for Housing, 5% for Health and 5% for Education. While this sounds reasonable for people exempt from Income Tax, anyone in the 10 Lac slab have far more expenses on Housing, Health and Education. Those 3 dimensions have become far more costlier for Salaried Class which is severely underreported in CPI. 
  4. Inflation is a recognized concept in case of capital gain taxation, why is the same benefit not provided to income tax payers

Ask from GOI: Income Tax slabs to be reset every year on the basis of CPI stats published by GOI

Note: For sake of simplification, 4% cess has been used in calculations, it used to be 3% prior to 2018. Additionally, beneficial changes made to lowest slab in 2018 has been assumed to have been available since 2012.

13,220 have signed. Let’s get to 15,000!