The silent surcharge: Pink tax and how it eats into women’s earnings

Now, layering that with income tax, the financial gap widens even further, leaving women with less disposable income than their male counterparts. This isn’t just an unfair coincidence, it’s a systemic issue that deepens financial inequality.

Let’s move beyond symbolic gestures and confront this dual economic burden through meaningful tax reforms and policy solutions that support women’s financial empowerment.

Decoding pink tax

The pink tax isn’t an official tax – it’s an implicit cost that women bear simply for being women. Studies worldwide have consistently exposed these price disparities:

● A 2015 report by the New York City Department of Consumer Affairs found that women’s products cost 7% more on average than similar men’s products.

● In India, a survey revealed that items like razors, shampoos, and deodorants are priced 10-15% higher for women than their male counterparts.

● Even services, like dry cleaning and haircuts, often charge women 20-30% more for essentially the same offering.

For example, a women’s razor costs ₹250, while the men’s version—virtually identical—costs ₹200. A basic women’s haircut costs ₹500, while men pay ₹300 for the same service. These differences may seem insignificant, but over a lifetime, they accumulate into lakhs of rupees, impacting women’s savings, investments, and financial security.

Also Read: Where are the women? Why India’s trading floors remain a male domain

Income tax and women’s financial standing

While women in India have made strides in workforce participation, they still face a 28% gender pay gap, as per World Economic Forum’s Gender Gap Report 2024. Though income tax policies do not explicitly discriminate by gender, they fail to account for these financial disparities. The impact is stark:

● A woman earning ₹12 lakh per annum pays ₹83,200 in tax (without deductions), while also bearing a hidden expense due to gendered pricing.

● Over a 35-year career, this compounded effect of pink tax plus income tax results in a significant gap in wealth accumulation compared to men.

Tax reforms for financial equality

India’s tax policies remain largely gender-neutral, but targeted tax reforms could help level the playing field. Here are some recommendations:

1. Gender-based tax rebates: Introducing higher tax deductions for working women to offset wage disparities.

2. GST reductions on women-centric products: While GST on sanitary napkins was removed, other essential women’s products – like personal care items and baby products – should also see lower GST rates to counterbalance the pink tax.

3. Enhanced deductions for women entrepreneurs: Encouraging financial independence through enhanced tax deductions for women-led start-ups and businesses.

4. Tax benefits on caregiving expenses: Since women disproportionately bear caregiving responsibilities, tax deductions for day care, elderly care, and domestic help can ease their financial strain.

5. Higher HRA exemptions for women: Given higher rental costs for women due to safety concerns, an increase in house rent allowance (HRA) exemptions for female taxpayers could offer much-needed relief.

Also Read: Why business schools hold the key to bridging the gender gap

The path to true financial independence

While tax reforms can alleviate some financial burdens, tackling gender-based pricing requires a broader approach:

● Consumer awareness campaigns to educate women about price disparities can drive more informed purchasing decisions.

● Regulatory oversight on gendered pricing to ensure fairness across industries.

● Financial literacy programmes tailored for women to enhance investment awareness and wealth-building strategies.

Conclusion: A call for change

Women already navigate lower wages and higher expenses, and the combined effect of pink tax and income tax only widens the financial disparity. While income gaps are widely debated, an equally insidious issue often goes unnoticed: the hidden costs that disproportionately impact women.

India’s tax policies must evolve to reflect economic realities – not as a favour, but as a step towards true financial equality. Addressing these hidden financial burdens isn’t just about fairness – it’s about enabling genuine economic empowerment.

Let’s not just celebrate women’s achievements on one particular day—let’s push for real, systemic change that paves the way for a financially equitable future.

(Niyati Shah is vertical head, personal tax, at 1 Finance. Views are personal.)

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