Facing severe criticism from the Opposition over demonetisation, the Narendra Modi-government is considering a proposal to revise the base Income Tax slab and increase it up to Rs 4 lakh per annum from the current Rs 2.5 lakh per year, according to a private news channel.
It was reported that the government may announce revised tax slabs before the announcement of Uttar Pradesh Assembly election dates. Quoting sources, it also said while people in the Rs 4-10 lakh income group may be taxed at 10 percent, 15 percent tax is likely for the 10-15 lakh income group.
Similarly, while people in the Rs 15-20 lakh income group may have to pay 20 percent tax, 30 percent tax may be imposed on those having income above Rs 20 lakh. If implemented, the new tax proposals will give a huge relief to taxpayers reeling under the impact of high inflation and high tax rates.
Currently, income up to Rs 2.5 lakh is exempt from tax, income from Rs 250,001 to Rs 5,00,000 is taxed at 10 percent, from Rs 5,00,001 to Rs 10,00,000 at 20 percent and above Rs 10 lakh at 30 percent.
However, government spokesperson Frank Noronha rejected the report about new income tax slabs, calling it “‘baseless and unfounded”.
Earlier on December 14, Union Finance minister Arun Jaitley had indicated that the government may reward the common man by lowering both direct and indirect tax rates in Budget FY18 as demonetisation is set to expand the tax net.