It seems there is more pain in store for the country’s salaried classes. Already the government has greatly revised the slabs for taxation on salaries which has cut salaries down significantly. On top of this, rising general taxation such as GST means the average salaried individual pay nearly half of their earnings in the form of taxes.
Income taxes are expected to rise by about 48pc — another ambitious target. Although the tax rate for the salaried class remains unchanged, changes in tax slabs have increased their burden. Over the past five years, real incomes of the salaried segment have dropped by more than 30pc. Higher taxes will further reduce post-tax income, increasing financial pressure on salaried individuals.
Tax burdens have significantly risen for middle-income households, putting further pressure on their real disposable income. This negatively impacts household sentiment and accelerates the brain drain from the country. At a time when physical capital is stuck in unproductive areas like real estate, losing intellectual capital due to excessive taxation is like killing the goose that lays the golden eggs. In simple terms, the budget continues to target existing taxpayers while largely ignoring those who are not taxed. A major change is the revised tax regime for export-oriented industries, which will increase corporate taxes and reduce incentives for reinvestment. Most of the increase in direct taxes is borne by current taxpayers, indicating a deeper reliance on them rather than broadening the tax base.
The middle class has been silently enduring hardship for years, bearing the weight of tax breaks, subsidies, concessions, and preferential access to land, capital, and infrastructure for the privileged classes—both rich and poor—while being neglected themselves. Rising inflation, stagnant wages, and punitive taxes are decimating their purchasing power and savings. Budgets and plans allocate no resources for them, and there is no social safety net in place for death, disability, illness, or unemployment. These households are teetering on the edge of financial ruin, one mishap away from complete disaster.
