Budget 2025-26: CII urges govt to cut income tax, reduce excise duty on fuels

The Confederation of Indian Industry (CII) on Sunday urged the Central government to reduce the income tax for individuals and cut excise duty on fuels to increase disposable incomes in the hands of consumers, which would increase spending thereby spurring economic growth.

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As part of its wishlist in the run-up to Union Budget 2025-26, the apex business chamber has said that reducing the excise duty on fuels is crucial as fuel prices significantly drive up inflation, forming a substantial portion of the overall household consumption basket.

The central excise duty alone accounts for approximately 21 per cent of the retail petrol price and 18 per cent for diesel. Since May 2022, these duties have not been adjusted in line with the approximately 40 per cent decrease in global crude prices. Lowering excise duty on fuel would help reduce overall inflation and increase disposable incomes, according to the CII statement.

It also states that the gap between the highest marginal rate for individuals at 42.74 per cent and the normal Corporate Tax Rate at 25.17 per cent, is high. Further, inflation has reduced the buying power of lower- and middle-income earners. The Budget could consider reducing marginal tax rates for personal income up to Rs 20 lakh per annum. This would help trigger the virtuous cycle of consumption, higher growth and higher tax revenue.