Big Bang Theory! ₹1,00,000 Crore Tax Revenue Forgone Can Generate ₹5,00,000 Crore
Post Budget 2025, the tax landscape is changing dramatically. Out of the total 7.54 crore taxable individuals, 5 crore taxpayers have already filed nil returns. Add to that another 1.54 crore taxpayers who will effectively pay no personal income tax due to the latest budget announcement. This means that 85% of individual taxpayers are now exempt!
Yes, no personal income tax for the majority! We are shifting towards a system where taxation is increasingly expenditure-based—harder to evade, ensuring a consistent rise in tax revenues and ultimately lowering fiscal deficits. A masterstroke! But here's the catch—this saved money must not be wasted.
Where Does This Lead?
Let’s say ₹1,00,000 crore is saved in taxes. If 50% of this is spent, it would generate around ₹6,000 crore in additional GST revenue. The remaining ₹50,000 crore, if invested in PPFs, Mutual Funds, and Bank Deposits, will fuel industries, businesses, and infrastructure. The MSME sector, which contributes 30% to GDP, will naturally benefit.
If ₹15,000 crore (30% of ₹50,000 crore) is directed toward MSMEs, this could lead to the creation of 15,000 new MSMEs, employing 75,000 people. At an average salary of ₹1.8 lakh per annum, this new workforce would spend ₹1,350 crore, generating ₹162 crore in GST revenue. The spending ripple effect would further add ₹4,000 crore to GDP, boosting tax revenues by ₹480 crore.
Big Enterprises, Bigger Impact
The remaining ₹35,000 crore, when invested in large enterprises, can grow GDP by ₹1,00,000 crore at a 3X multiplier. This alone could add ₹12,000 crore in GST revenue (assuming a 12% median GST rate). The total impact?
- ✅ A₹1,50,000 crore GDP boost
- ✅ A₹18,640 crore additional GST revenue
- ✅ A75,000+ new jobs
- ✅ A solid 0.5% GDP increase
And we haven't even factored in the Mahakumbh effect (which alone contributes ~1% to GDP), infrastructure spending, tourism, MSME incentives, and more.
The Big Picture: Towards an 8% Growth Rate?
Recently, Shri P. Chidambaram, citing Prof. Rajeev Gowda, warned of a middle-income trap if India fails to grow at 8% per annum. The usual naysayers, Harvardians, "intellectuals," and professional pessimists doubted this. But with budgetary support and economic momentum, we're looking at:
- 6.5% growth (as per the Economic Survey)
- +1% additional boost from budget measures
- +1% from Mahakumbh, MSME growth, agriculture push, and skilling initiatives
That puts us at an 8% GDP growth rate! We are now on the brink of becoming a $4 trillion economy and closing in on the third-largest spot globally.
Meanwhile, the world struggles—the U.S. is fighting to sustain 3% growth, China is uneasy at 5%, and here we are, racing ahead.
A decade of vision, consistency, and execution—from a tea seller to a statesman, supported by a strong, no-nonsense team with a sharp Gujju mindset and a Madrasi intellect—has made this possible.
Now, Delhi Dilwalon, Bihari Babus, the choice is yours!
Oh, and to all the high-income folks who used to complain about high taxes—take a deep breath and enjoy the relief.
Vande Mataram!
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