Bhubaneswar, 1st February 2017 (OdishaLIVE Bureau): Union Finance Minister Arun Jaitley announced in his budget speech that he will reduce the tax rate of individuals earning between Rs. 2.5 lakh to Rs. 5 lakh per annum to 5% from the next financial year. The current rate for the same slab is 10%. This would reduce the tax liability of all individuals having income below Rs. 5 lakh and also it would additionally benefit the tax payers having annual income beyond Rs. 5 lakh. Today he was presenting the Union Budget for the financial year 2017 – 2018 in the Lok Sabha.
‘The present burden of taxation is mainly on honest tax payers and salaried employees who are showing their income correctly. Therefore, post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation’ the Finance Minister mentioned. ‘If a nominal rate of taxation is kept for lower slab, many more people will prefer to come within the tax net’ he added. Shri Jaitley made an appeal to all the citizens to contribute 5% income tax if their income is falling below Rs. 5 lakh for Nation Building exercise.
The tax slabs from next financial year will be:
| Annual Income | Income Tax | Education Cess | Higher Education Cess |
| Up to Rs. 3 Lakh | Nil | Nil | Nil |
| Rs. 3-5 Lakh | 5% | 2% | 1% |
| Rs. 5 Lakh – Rs. 10 Lakh | 20% | 2% | 1% |
| Above Rs. 10 Lakh | 30% | 2% | 1% |
| Above Rs. 50 Lakh | 30% | + Surcharge of 10% | |
| Above Rs. 1 Crore | 30% | + Surcharge of 15% |
Arun Jaitley’s Proposal on Income Tax in Budget Speech
‘I, therefore, propose to reduce the existing rate of taxation for individual assesses between income of Rs. 2.5 lakh to Rs. 5 lakh to 5% from the present rate of 10%. 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. 2,500 available only to assesses up to income of Rs. 3.5 lakh. The combined effect of both these measures will mean that there would be zero tax liability for people getting income up to Rs. 3 lakh p.a. and the tax liability will only be Rs. 2,500 for people with income between Rs. 3 and Rs. 3.5 lakh.
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 lakh. While the taxation liability of people with income up to Rs. 5 lakh 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.
In order to make good some of this revenue loss on account of this relief, I propose to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs. 50 lakh and Rs. 1 crore. The existing surcharge of 15% of Tax on people earning more than Rs. 1 crore will continue. This is likely to give additional revenue of Rs. 2,700 crores.
In order to expand tax net, I also plan to have a simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to Rs. 5 lakhs other than business income. Also a person of this category who files income tax return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high value transaction. I appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of Rs. 2.5 lakh to Rs. 5 lakh.