Will government raise tax slabs to ease pains of demonetisation?
The one demonetisation laddoo (per family) apparently not being sweet enough to ease the pain and bitterness of the noteban drive, the Centre is now coming up with a more substantial idea - income tax slabs.
Rumour has it that the Narendra Modi government, in the Union Budget for the next fiscal, is very kindly considering raising the tax slabs to appease the aam aadmi languishing in ATM queues.
According to murmurs, the base slab is likely to be increased from a minimum of Rs 2.5 lakh per annum to Rs 4 lakh per annum. The proposed break-up is:
- 10 per cent tax for Rs 4-10 lakh income group. (The current slab is Rs 2.5-5 lakh taxed at 10 per cent.)
- 15 per cent tax for Rs 10-15 lakh income group. (Presently, 20 per cent tax is imposed on income between Rs 5 lakh to Rs 10 lakh.)
- 20 per cent tax for Rs 15-20 lakh income group. (Currently, 30 per cent tax is levied on income more than Rs 10 lakh.)
- 30 per cent tax for income above Rs 20 lakh.
Keeping in mind the recent antics of the government, the news would be best taken with a pinch of salt, lest it turns out to be a fantastic GPS-chip-in-2000-note kind of buzz. Or, if announced, is overturned/or the slabs increased/decreased anytime at the whim of the Centre – possibly just when you have made all your investments and think you have saved on tax.
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| The income tax slabs have been unchanged for some years and we all can do with more disposable income in our banks. (Photo: India Today) |
If a formal announcement on the revised tax slabs will be made by the government, it will be – now don't be surprised - before the dates for the crucial Uttar Pradesh elections are announced.
No, we are not alleging the government wants to influence the election result; it's just that it'll be the Budget time of February-March, so perfect for the Centre to show its generosity.
It is also likely that the grand announcement will come directly from Prime Minister Modi himself, as is the norm these days, and not the Union finance ministry.
Will he announce higher taxation on the rich? Highly unlikely.
In any case, the income tax slabs have been unchanged for some years and we all can do with more disposable income in our banks, even if we can't withdraw it. Looks good on paper.