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Jaitley's Tax Reform targets lower income group

Image Courtesy: India Today

 

 

By Yogita Chainani

3YogitaChainani

 

Bangalore, 07 Feb: Finance Minister (FM) Arun Jaitley announced the Union Budget for the financial year 2017-18, on February 1, 2017. Jaitley highlighted 10 important themes like farmers; rural population; energizing youth; poor and underprivileged; infrastructure; financial sector; digital economy; public service; prudent fiscal management; and tax administration in the budget, but however Tax administration is a striking feature of budget.

Jaitley announced reduction of the existing rate of taxation for individuals within the income slab of Rs 2.5 lakh to Rs 5 lakh to 5 per cent from 10 per cent. Moreover, there will be a surcharge of 10 per cent for those whose annual income is Rs 50 lakh to Rs 1 crore. Additionally, 15 per cent surcharge on Rs 1 crore or more remains unchanged. This states that individuals below the age of 60 within income slab of Rs. 2.5 lakhs to Rs. 5 lakhs have to pay 5 per cent tax, which is less than the initial 10 per cent. Whereas, individuals within the age bracket of 60 to 80 years within the income slab of Rs. 3 lakhs to Rs. 5 lakhs have to pay 5 percent. But the major benefit is for senior citizens, since the age group above 80 does not have to pay any taxes if their annual income is up to Rs. 3 lakhs.

Jaitley, during his budget speech claimed, "These tax revisions target to benefit the masses, and makes it a point that people with higher income group pay more taxes thereby encouraging the lower income groups to pay less taxes."

Mahesh Shetty, Chartered account, 55, from Mumbai has an annual income of Rs 12 lakhs and looking at tax revision, he said, "I paid tax of Rs. 1.80 lakhs for the financial year 2016-2017 and now, I will pay Rs.10, 000 less. So basically, this scheme is not benefiting me. But yes, people who earn less than Rs.2.5 lakhs will surely be benefitted by this proposed revision."

Sandeep Dam, 51, head of Axis Bank, West Delhi said, "I earn around 20 lakhs per annum and hence this tax revision won’t be of any use for me. I will just save up to Rs 2000 monthly and Rs 20, 000 annually on my income." Dam also explained that people whose income has been hiked to or above Rs 50 lakhs would not be able to profit from the increase due to changes in the tax rates and surcharges.

Bhavna Jiandani, 49 year-old from Mumbai, an employee of Bharat Petroleum Corporation Ltd, said, " I have an annual income of Rs. 21 lakhs and I will not get any benefit from this tax rate reform, but however, this reform will help young generation, since at beginners level their package is less and will encourage people to pay the taxes."

Visarg Shah, Market Analyst, 24, from Hyderabad welcomes the tax reform saying, "I earn an annual salary of Rs. 9 lakhs. The tax reform is good for me as I'll save double the amount than before."

"Tax relief is there for all slabs. Emphasis in this budget is more on tax compliance measures, and implementation of tax avoidance measure," said Anil Nagpal, 55, businessman from Delhi.

Pran Saha, 26, Operational analyst in American Logistics Company, Bangalore, said, "Initially, my salary package was Rs 4 lakhs. Now, the package has been hiked up to Rs. 6 lakhs. This means that I will have to pay more taxes with this reform than before."

 

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