Budget 2025: Ex-Infosys CFO Mohandas Pai seeks income tax slab rethink, says ‘middle class upset due to tax terrorism’ | Mint

Former Infosys CFO TV Mohandas Pai highlighted the growing burden on the middle class due to rising inflation, increasing EMIs, and escalating education costs. In an insightful interview with Mint, Pai, a prominent voice in Indian business and finance, outlined a set of key reforms needed for the country .”The middle class is very angry and upset over high taxes and poor quality of life,” Pai said, as he sought income tax relief in Union Budget 2025.

He expressed concern over the burden on middle-class families, particularly as loan EMIs increased, school and college fees soared by 40-60% in the past three years, but incomes remained stagnant.

According to Mohandas Pai, the middle class faces increasing financial strain for several reasons. Firstly, EMIs have risen significantly, with about 1.2 crore people holding housing loans and an additional 1.5 crore individuals managing other types of loans. As a result, they are paying much higher EMIs, while their incomes have not increased at the same rate. Inflation is also adding to their burden. 

“Another primary concern is the sharp rise in school and college fees, which have surged by 40-60% over the past three years. For middle-class families with two children, paying higher fees out of after-tax income puts them in deep financial trouble. As a result, many middle-class families are struggling, with little disposable income left, and they are understandably angry and upset,” Pai said.

Pai has called for a shift in government priorities to better support the middle class. The latter has historically supported the current regime but feels neglected and overburdened.

“I think they’re very angry and upset due to what I call ‘tax terrorism. We need to rethink the tax slabs. P. Chidambaram introduced three slabs, and now Finance Minister Nirmala Sitharaman has increased it to seven. And then we have this ridiculous popcorn tax—remember, there are three different kinds of popcorn taxed differently. The Finance Minister spent so much time explaining why it was necessary, but it’s absurd. The biggest issue is the extractionist approach of tax authorities—that’s the reality. Also, reducing GST on medical insurance is a simple task that could be done in a day, yet they keep going around in circles and causing unnecessary hassle. There’s immense frustration because, for the last 10 to 12 years, the middle class has been carrying the weight of all these taxes.”

Key takeaways from Mohandas Pai’s interview

Complexity of income tax slabs: Pai criticises the increasing complexity of tax slabs. He points out how the number of tax slabs has increased significantly, making the tax system more confusing and difficult to understand.

Reduce tax burden: Lower tax rates for the middle class and provide relief from excessive taxation.

“Popcorn Tax” analogy: Pai uses the “popcorn tax” example to illustrate the government’s focus on trivial matters while ignoring more pressing concerns.

“Tax Terrorism”: Pai alleges that tax authorities are engaging in “tax terrorism,”

Increasing EMIs: Higher interest rates lead to increased loan repayments, strain disposable income.

Education Costs: The rising cost of education, from school fees to higher education, is a significant financial burden for middle-class families.

Union Finance Minister Nirmala Sitharaman will present her eighth consecutive Budget 2025 on Saturday, February 1.