Equirus has suggested eliminating advance tax and gradually tapering small-savings schemes to unlock ₹10 lakh crore in working capital and accelerate India’s path to a $20 trillion economy, citing potential benefits for compliance and growth.
Equirus has argued that India could unlock about ₹10 lakh crore in working capital by abolishing advance tax, a system that requires taxpayers to pay instalments on income before it is actually earned. In a report titled “India’s path to a $20 trillion economy”, the domestic brokerage said the change would not amount to a revenue cut because the full tax would still be paid at filing, only later in the year. It said the reform would also reduce compliance by removing four instalment deadlines and ease pressure on companies when a weak quarter forces a downward revision. The report said advance tax accounted for about 38% of gross direct tax collections in FY25, or roughly ₹10 lakh crore out of about ₹27 lakh crore.
The brokerage also pointed to what it described as a growing refund burden, saying over-collection has fed a refund bill that now exceeds ₹4 lakh crore a year. It contrasted India’s quarterly instalment structure with systems in the US, the UK and China, where it said ordinary taxpayers do not face an equivalent arrangement. The proposal comes as tax simplification has become a recurring theme in policy debates, with the Institute of Chartered Accountants of India recently suggesting that advance tax be renamed “estimated tax” under the new Income-Tax Act to make the framework clearer.
Equirus also called for a gradual tapering of small-savings schemes, arguing that administered rates such as the Public Provident Fund at around 7% and the Senior Citizens’ Savings Scheme at around 8% can keep borrowing costs artificially high when market yields fall. The brokerage said the small-savings pool is worth about ₹24 lakh crore, equal to roughly 45% of the corporate bond market, and has been growing at 14% to 16% a year. It suggested that even if only a fifth of that money, or about ₹4.9 lakh crore, shifted into market-priced bonds, the effect would be meaningful, while the schemes could continue in post offices in smaller towns to protect ordinary savers.
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