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Why can't India change the income tax slabs?

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Mandeep Singh
Mandeep SinghDec 17, 2016 | 18:29

Why can't India change the income tax slabs?

Since the demonetisation - or remonetisation as some now prefer to call it - was announced, there have been thousands of opinions for and against the move and what it would, or would not, lead to.

However, not once has anyone discussed the existing tax slabs and how the common man is being ripped apart at every stage. Whether it is this or any other government "collection" drive, it is the multitudes of people, the so-called middle class, who bear the brunt.

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These are the millions who make up what is called the "working class" and on whose sweat and toil the country runs.

Be it the government office babu, a middle-level employee in a private company, a call centre worker, a taxi driver or the neighbourhood vegetable seller, their average monthly income these days is between Rs 30 to 35,000.

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Now, even though incomes have increased, the cost of living is significantly more.  Credit: Reuters

And, under the present tax regime, they have to pay at 10 per cent as income tax.

So if someone has an income of, say, Rs 30,000 a month (Rs 3,60,000 a year), post deductions, he will lose nearly Rs 1,000 per month to tax. And this is income, not profit. That means, this is the money he is making to run his family and save for a rainy day, and pay his housing or other loans and look after the family's medical expenses, God forbid!

This is the slab that is in existence for several years now, from a time when incomes were not as much. The 10 per cent tax then could be justified since people earned less and spent less, when the rupee went a longer way. Now, even though incomes have increased, the cost of living is significantly more. Under the circumstances, it makes no sense to carry on with the existing tax slabs.

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It really is time to re-adjust these, keeping in mind people's earnings and inflation. It's also about time all income up to at least Rs 5,00,000 is tax-free so that the working (or service) class is left without any burden. There can, however, be slabs after that, even though those should be reworked on.

The taxman should, of course, heavily tax the rich, who earn in crores. It's rather unfair to see that those earning, say, Rs 10 lakh and those earning Rs 10 crore pay the same percentage of tax.

And everybody pays the other taxes anyway. That includes sales taxes, service taxes, luxury tax (hospital ICU treatment also briefly comes under luxury taxin Karnataka) and even a swachh bharat tax! And all this giving takes place when there are no social security schemes other than the Rs 1,000 a month given as pension to the "no other income" senior citizens!

We should be ashamed of ourselves. Is this a "progressive" nation?

(Editor's note: The above story was updated to reflect tax estimations as per current I-T policy)

Last updated: December 18, 2016 | 15:45
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