The Sheconomy Advantage: How tax breaks can fuel India's women-led growth
Building a prosperous economy with women at the core
India's growth narrative remains optimistic, underpinned by favourable demographics and stable governance that shield the economy from global turbulence. Despite short-term challenges like rising inflation and reduced government expenditure, India's growth trajectory is robust, with an expected average growth rate of 6.5% between 2025 and 2030, according to Goldman Sachs. The Reserve Bank of India (RBI) has projected a 6.6% growth rate for the fiscal year 2025.
Amid these dynamics, the government is expanding its focus to include new growth avenues, one of which is enhancing women's participation in the paid workforce. A World Bank report highlights that if women's workforce participation in India reached 50%, the country's annual growth could increase by 150 basis points. To achieve this, targeted tax incentives could be a transformative tool, driving economic growth while empowering women and fostering entrepreneurship.
Empirical evidence links women’s economic empowerment and the closing of gender gaps to economic growth, increased productivity, improved financial sector outcomes and financial stability. The International Monetary Fund says the elimination of barriers against women could increase output and labour productivity by as much as 25 percent. Empowerment of women requires attention to their health, education and awareness, status in the family participation in decision-making, material security, etc. The key to this is financial independence for women.
However, the situation does not align accurately in the workforce. The female labour force participation rate in India is 32.8 percent (2021–22), much lower than the global average of 47 percent, per the Ministry of Labour and Employment. Though there is an increase in the rate of participation of women in the workforce of 9.5 percent compared with 2017–18, most of this rise is from rural areas (12 percent) compared with urban areas (3.4 percent). Multiple factors keep women away from work, such as access to employment, choice of work, working conditions, job security, wage disparity and access to childcare. Many women are involved in household chores, which also keeps them away from the job market due to social norms. Even if women are educated, looking after the household keeps many women outside the workforce.
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Tax incentives to boost women's workforce participation
Tax incentives could encourage women to either join or remain in the workforce, particularly after marriage or childbirth. For instance, income earned by women re-entering the workforce could be exempt from taxes for a defined period. Similar measures in Singapore, such as the working mothers’ child relief scheme, have successfully increased female labor force participation. Additionally, offering tax incentives to companies that employ women and provide childcare or flexible work arrangements could create an environment conducive to women’s career growth.
Tax deductions for childcare expenses and an increased standard deduction for women employees could help bridge pay disparities and boost disposable incomes. For example, Canada’s tax credits for childcare have positively impacted women's financial independence, a model that could inspire similar measures in India.
Status of Women in India: Challenges and Opportunities
India’s population reached 1.451 billion in 2024, with women accounting for 48.42% in 2023, projected to rise to 48.8% by 2036. Women contribute significantly to the economy through entrepreneurship, agricultural activities, and employment, yet they face persistent challenges, including poverty, discrimination, and limited access to financial resources. Social norms often restrict women to unpaid caregiving roles, limiting their ability to engage in income-generating activities. Women-owned Micro, Small, and Medium Enterprises (MSMEs) constitute 20.5% of total registered MSMEs and contribute 18.73% to employment. Similarly, women-led startups account for 47.6% of India’s recognized startups, showcasing their rising influence in the entrepreneurial landscape.
Current taxation regime and gaps
India’s taxation framework offers limited direct incentives tailored for women, leaving a significant gap in leveraging their potential for economic growth. The current dual taxation system provides basic exemptions—₹2.5 lakh under the old regime and ₹3 lakh under the new regime. While general provisions like house rent allowance, tuition fee deductions, and interest deductions on housing loans are available, they apply universally without addressing the specific financial challenges faced by women. Moreover, there are no tax provisions aimed at encouraging women’s participation in the workforce or supporting their entrepreneurial endeavours.
Bridging the gaps with well-structured policies that prioritize women’s unique needs can serve as a catalyst for economic growth, increasing both workforce diversity and the nation’s tax base. To truly empower women, India’s tax regime must evolve to incorporate global best practices while addressing its own socio-economic realities.
Saraswathi Kasturirangan
Mahesh Jaising
Mahesh is a Partner and National Indirect Tax Leader of the Indirect Tax Group at Deloitte and is based out of the Bengaluru office. He has over 24 years of experience in a wide range of indirect tax matters, with a particular focus on the IT, e-commerce, real estate and education sectors. Mahesh has extensive experience in advising clients on the tax implications and risks involved in the establishment of manufacturing and distribution networks and services operations. He has also advised companies in restructuring with respect to their manufacturing and services activities, including the establishment of SEZ units and availing of host of indirect tax benefits. In his advisory role, Mahesh has his clients on complex issues including cross-border service tax & VAT and on tax issues pertaining to software transactions. Mahesh has assisted large MNCs on implementation of goods and services tax in India and continues to advise clients in all spheres of indirect taxes in India. Mahesh has also appeared before the tax authorities on various complex high-value service tax, VAT and GST litigation matters. He is deeply engaged in representations before policymakers and regulatory authorities through various industry chambers. Mahesh is ranked amongst leading indirect tax advisors in ITR's Indirect Tax Leaders Guide. Mahesh is a graduate in Commerce from the University of Bangalore and qualified as a Chartered Accountant.
Mahesh Jaising
Mahesh is a Partner and National Indirect Tax Leader of the Indirect Tax Group at Deloitte and is based out of the Bengaluru office. He has over 24 years of experience in a wide range of indirect tax matters, with a particular focus on the IT, e-commerce, real estate and education sectors. Mahesh has extensive experience in advising clients on the tax implications and risks involved in the establishment of manufacturing and distribution networks and services operations. He has also advised companies in restructuring with respect to their manufacturing and services activities, including the establishment of SEZ units and availing of host of indirect tax benefits. In his advisory role, Mahesh has his clients on complex issues including cross-border service tax & VAT and on tax issues pertaining to software transactions. Mahesh has assisted large MNCs on implementation of goods and services tax in India and continues to advise clients in all spheres of indirect taxes in India. Mahesh has also appeared before the tax authorities on various complex high-value service tax, VAT and GST litigation matters. He is deeply engaged in representations before policymakers and regulatory authorities through various industry chambers. Mahesh is ranked amongst leading indirect tax advisors in ITR's Indirect Tax Leaders Guide. Mahesh is a graduate in Commerce from the University of Bangalore and qualified as a Chartered Accountant.
The Way Forward: Empowering women through tax policy
Empowering women with targeted tax incentives can lead to greater economic participation and inclusivity. Women’s involvement in policymaking is equally crucial for ensuring that policies address their unique challenges and opportunities. Tax measures supporting family planning, education, and healthcare can also address demographic pressures, creating a demographic dividend that fuels economic growth.To achieve tangible results, tax policies must be carefully designed and implemented, drawing lessons from global practices while adapting to India’s unique socio-economic landscape. The Sheconomy advantage is not just a vision but a pathway to a more equitable and prosperous India.
