Budget: 2.5 to 5 lakh will take place 5% of annual income, 10% TAX
Proposed to set up strategic crude oil reserves at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan. This will take our strategic reserve capacity to 15.33 MMT
“If the limit of Rs 1.5 lakh under Section 80C for investment is used fully, the tax would be zero for people with income of Rs 4.5 lakhs. While the taxation liability of people with income up to Rs 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person. The total amount of tax foregone on account of this measure is Rs 15,500 crores,” he said.
In the case of senior citizens above 60 years, there will be no tax upto Rs 3 lakh, while the exemption will be upto Rs 5 lakh in case of citizens above 80 years. Both the categories will attract income tax of 20 percent on income between Rs 5 lakh and Rs 10 lakh and 30 percent for income above Rs 10 lakh.
“This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability. In order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2500 available only to assessees upto income of Rs 3.5 lakhs. The combined effect of both these measures will mean that there would be zero tax liability for people getting income up to Rs 3 lakhs p.a. and the tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs,” the finance minister said in his budget.
In a major step, Finance Minister Arun Jaitley announced the reduction of the existing rate of taxation for individuals with income ranging between Rs 2.5 lakh to Rs 5 lakh to 5% instead of 10%. There will be a surcharge of 10% for those whose annual income is Rs 50 lakh to Rs 1 crore. Additionally, the 15% surcharge on Rs 1 crore or more remains unchanged. This is to make up for Rs 15,000 crore loss due to the cut in the personal income tax rate.
Making a case for widening the tax net, Jaitley said the lower entry-level tax rate will expand the base in the coming year. He made a case for the same by explaining how the Direct Tax collection in India is not commensurate with spending. While 3.7 crore individuals filed returns, 99 lakh showed income below the exempt limit, 1.95 crore were between Rs 2.5 and Rs 5 lakh and only 24 lakh were above Rs 10 lakh. Out of 76 lakh individual assessee who declare over Rs 5 lakh income, a major chunk of 56 lakh are salaried. “India is a largely tax non-compliant society thanks to the presence of large cash economy which allows tax evasion,” the FM said.
With the reduction, those earning Rs 3 lakh will continue to be exempt from paying taxes, as the government provides Rs 5,000 rebate under the income tax act to all those earning up to Rs 5 lakh. As of now, the tax on Rs 3 lakh income is Rs 5,000 but after the rebate of Rs 5000 the effective tax is nil.
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“We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015,”
“If the limit of Rs 1.5 lakh under Section 80C for investment is used fully, the tax would be zero for people with income of Rs 4.5 lakhs. While the taxation liability of people with income up to Rs 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person. The total amount of tax foregone on account of this measure is Rs 15,500 crores,” he said.
In the case of senior citizens above 60 years, there will be no tax upto Rs 3 lakh, while the exemption will be upto Rs 5 lakh in case of citizens above 80 years. Both the categories will attract income tax of 20 percent on income between Rs 5 lakh and Rs 10 lakh and 30 percent for income above Rs 10 lakh.
“This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability. In order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs 2500 available only to assessees upto income of Rs 3.5 lakhs. The combined effect of both these measures will mean that there would be zero tax liability for people getting income up to Rs 3 lakhs p.a. and the tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs,” the finance minister said in his budget.
In a major step, Finance Minister Arun Jaitley announced the reduction of the existing rate of taxation for individuals with income ranging between Rs 2.5 lakh to Rs 5 lakh to 5% instead of 10%. There will be a surcharge of 10% for those whose annual income is Rs 50 lakh to Rs 1 crore. Additionally, the 15% surcharge on Rs 1 crore or more remains unchanged. This is to make up for Rs 15,000 crore loss due to the cut in the personal income tax rate.
Making a case for widening the tax net, Jaitley said the lower entry-level tax rate will expand the base in the coming year. He made a case for the same by explaining how the Direct Tax collection in India is not commensurate with spending. While 3.7 crore individuals filed returns, 99 lakh showed income below the exempt limit, 1.95 crore were between Rs 2.5 and Rs 5 lakh and only 24 lakh were above Rs 10 lakh. Out of 76 lakh individual assessee who declare over Rs 5 lakh income, a major chunk of 56 lakh are salaried. “India is a largely tax non-compliant society thanks to the presence of large cash economy which allows tax evasion,” the FM said.
With the reduction, those earning Rs 3 lakh will continue to be exempt from paying taxes, as the government provides Rs 5,000 rebate under the income tax act to all those earning up to Rs 5 lakh. As of now, the tax on Rs 3 lakh income is Rs 5,000 but after the rebate of Rs 5000 the effective tax is nil.
Continue without loginorLogin from existing accountFacebookGoogleEmailShare on FacebookShare on TwitterRefrain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks, name calling or inciting hatred against any community. Help us delete comments that do not follow these guidelines by marking them offensive. Let's work together to keep the conversation civil.HIDE
“We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015,”
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