The
government may go in for raising the income tax exemption limit to Rs 3
lakh from Rs 2.5 lakh in the Union Budget 2015-16 to place more money
in the hands of consumers so that demand picks up.
If
the proposal is approved, it is also likely to entail some changes in
the tax slabs bringing more relief to people in the lower-income
brackets and taxing those in the high-income slabs more.The lowest slab
will cover those in the Rs 3 lakh-Rs 10 lakh bracket and they will be
charged 10 per cent. Earlier, the lowest slab extended up to Rs 5 lakh.
Those
in Rs 5 lakh-Rs 10 lakh slab had to pay 20 per cent tax.According to
sources, the government is also considering a proposal to tax the
super-rich, who pay 10-per cent surcharge on their 30-per cent tax
liability (tax on tax) at a much higher rate of 33 per cent.
Currently,
the highest tax rate is 30 per cent for those with a taxable income of
more than Rs 10 lakh. The superrich, who have a taxable income exceeding
Rs 1 crore, pay 10 per cent surcharge on the 30-per cent rate they are
charged. This means that if their tax liability is Rs 1 lakh based on
the 30-per cent rate, they pay an extra Rs 10,000 as the 10-per cent
surcharge on their tax.
There
are only 42,800 individuals in this bracket.India Inc has been opposed
to such a high rate of taxation on grounds that it serves as a
'disincentive'.Tax expert Subhash Lakhotia said that the government
should keep tax rates low as very high tax rates encourage generation of
black money.
"Besides,
with high corporate and income tax rates, it would become difficult to
attract investment as tax rates in places like Singapore and Hong Kong
are much lower," he added.
Interestingly,
the DTC Bill introduced by the erstwhile United Progressive Alliance
government, had also proposed a fourth slab with a 35-per cent tax rate
for those with an annual income of more than Rs 10 crore drawing
protests from industry.Union finance minister Arun Jaitley in the Union
Budget last July raised the income tax exemption limit from Rs 2 lakh to
Rs 2.5 lakh, which provided some relief to more than 2 crore taxpayers.
High
interest rates have reduced the purchasing power of the consumer, which
is reflected in the contraction in output of consumer goods.
This
has in turn has dragged down the growth rate.The government is also
reported to be looking at recommendations of the SIT on black money on
ways to curb unaccounted money.
The
SIT has suggested that since most of the black money in the country is
held in hard cash, there should be an upper limit such as Rs 15 lakh or
even more on the amount of cash that an individual can keep.
The
SIT has further recommended that tax evasion should be considered a
"predicate offence" punishable with a jail term.However, at the same
time the government is aware that there is a need for a non-adversarial
tax regime to attract more investment to boost growth.
According
to sources, the government is also considering a proposal to exempt
from tax interest on fixed deposits with banks that have a maturity
period of more than three years. Senior bankers have been urging the
government to provide this concession in order to encourage savings.
http//airiefvision.wordpress.com
Sorrow looks back,Worry looks around,Faith looks up.
We must become the Change we wish to see in the world.Each raindrop makes some flowers glow;each struggle lessens human woe
