Finance minister Arun Jaitley gave the salaried class a relief in the 2017 budget, bringing down personal income tax limits for the lowest slab, a move aimed at softening the demonetisation blow.
For those with income of Rs 2.5 lakh to Rs 5 lakh, a tax rate of 5% will be applicable against the current 10%. Besides, a surcharge of 10% will be applicable for those earning Rs 50 lakh to Rs 1 crore. The surcharge of 15% will continue for all earning Rs 1 crore and above.
The increase in surcharge will help the government earn more.
The government has been saying lower rates will encourage more citizens to pay taxes. Presenting the budget, Jaitley said India was largely a non-tax compliant society.
The tax relief should cheer the middle-class seen as the BJP’s vote base and which faced a tough time getting cash after the currency recall.
Snaking queues outside banks and ATM kiosks were seen for weeks after the November 8 announcement sucked 86% of the cash in circulation and brought in cash restrictions.
“The government is counting on spends to go up as people will be left with more money in their hands. This is also a feel good budget and mostly in such cases, spends increase,” an analyst said.
Jaitley has been underlining the need to bring down tax rates to increase compliance.
The philosophy that high taxation would bring greater revenues had run its course and high rates had led to higher evasions, he had said.
Courtesy: Hindustan Times