There are strong, unconfirmed reports that in the next Union Budget, Govt. of India may revise the existing Income Tax slabs for individuals. As per insider reports, this announcement can be made before UP Elections, which are most probably happening in the months of February-March next eyar.
However, to remove any confusion, Govt’s spokesperson has denied this update, and termed this as ‘baseless’. But this side-effect of demonetization can actually happen, and in a short while, we will tell why.
Big Relief For Income Tax Payers?
The report originated from India Today news channel, which claimed that in order to compensate for the inconvenience experienced by the common man after the sudden demonetization move, and to ease some pain, Govt. ‘may’ revise the existing Income Tax slabs, and increase the minimum annual income to Rs 4 lakh, from current Rs 2.5 lakh.
The new, and revised tax slabs, as reported by the news channel are:
| Existing Tax slabs | Proposed Tax Slabs |
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As per the news channel, this information was provided by a source from Finance Ministry.
If implemented, this can be a huge relief for the individual taxpayer, who is right now reeling with the impact of demonetization and slow economy.
Govt. Spokesperson Terms This As Baseless
Meanwhile, as soon as this news started spreading, Govt. spokesperson completely denied this news, and termed it as baseless.
Frank Noronha, who is the Principal Spokesperson, Government of India & Director General of Press Information Bureau rejected this update, termed it as baseless and unfounded. ANI tweeted his denial.
But.. Can This Is Be Really True?
First of all, on December 14th, Finance Minister Arun Jaitley had hinted that the Govt. may ‘reward’ the common man by lowering both direct and indirect taxes, effective next financial budget.
While briefing the media, he was explaining the advantages of demonetization, and how this has resulted in more cash with the banks and Govt., and this can lead to higher tax collection which was not possible earlier.
He said, “.. This would also enable the government at some stage to make taxes more reasonable which will apply to both direct and indirect taxes,”
The hint about lower tax rates is clearly visible here, as he says, “The banking system will have lot more cash in it and therefore, it’s ability to support economy with low cost cash, that is cash whose capital (cost) is much lesser, would be much higher. Obviously with all these advantages, the social cost also on the system will go down..”
Secondly, removing tax for the common man has been BJP’s long term goal, since 2014 General elections.
During 2014 elections, the manifesto prepared by BJP clearly indicated that they want to remove income tax for the individuals, and consolidating various direct and indirect taxes on businesses (which has been achieved via GST).
Post-demonetization, it is a strong possibility that BJP Govt. can either revise the tax slabs or completely remove individual taxes for the common man.
Do you think that Govt. will reduce the tax net for individuals? Or this is just false rumors? Do let us know by commenting right here!