New Delhi: Ahead of the general elections, Narendra Modi government is understood to be working on a proposal to provide relief to the middle class tax payers who fall in the lowest personal tax slab of five per cent.
Indications are that this five per cent slab could be lowered further, bringing relief to about three crore tax payers whose annual income falls between Rs 2.5 to Rs 5 lakh. During 2017-18, the rate for this band was slashed by half to 5 per cent.
The Hindustan Times reported on Thursday that the proposal could be unveiled in the coming budget, in the form of a vote on account in view of the general elections.
It is unlikely the revenue collections will take a major hit with lowering of the tax slab, given the robust tax collections, improved tax compliance and the relatively growing tax base, the Paper said.
In December last year, Finance Minister Arun Jaitley had expressed confidence that the number of income taxpayers could double to almost 12 crore with increased formalisation of the economy.
While 6.86 crore I-T returns had been filed till December, and the number is expected to go up to 7.6 crore before the present government completes its five year term, he had said.
“During 2014, 3.8 crore people had filed I-T return when the NDA government came to power. There are 25-26 crore families here. The country is, however, capable of having a 11-12 crore tax payer base,” A confident looking Jaitley had said.
Chairman of the central board of direct taxes (CBDT) Sushil Chandra had also mentioned that between April and October, 2018, over 50 per cent more income tax e-returns were filed compared with the same period a year ago.
According to political observers, the election months are crucial for the incumbent government to win over the electorates with freebies and schemes to keep the voters base intact. The intention became clear last month when it reduced GST on 23 goods and services including movie ticket, TV and monitor screen.
Some companies have cut TV prices between Rs 1500 to Rs 2000 as the government notified the reduction in GST rates on January 1.
The council is meeting on January 22 and all eyes will be removing some more products from the highest 28 per cent GST slab including that of cement.
