The Honourable finance minister laid down the budget on February 01, 2017, disregarding the fact that MP E. Ahemad had deceased due to the cardiac arrest. The Honourable speaker permitted the Finance Minister to lay down the budget indicating that laying down and passing the budget is the “National obligation” on the parliament.
The FM laid down a very anti-populist budget indicating it as a budget for the poor. The FM in order to promote tax filing for Individuals proposed to revise the slab rates and the surcharge rates. He started with a very simple fact that, the no. of people showing income in higher slab is less that the sale of cars. The following was the slab rates proposed.
The FM indicated that the net benefit from the slab rates would result in a net effective savings of Rs. 12,500 for the taxpayers which will eventually set off against the introduction of surcharge for higher Income groups.
It should be taken in consideration that the surcharge has been levied on the individual @10% for income bracket of 50 Lakhs to 1cr, which would mean that the tax relief provided to the lower income group comes with a cost to surcharge for the above group.
Also, the rebate of 87A has been reduced to 2500 up to the income of INR 3,50,000.
The Effective Tax Structure for Individuals proposed is as follows:
The Above taxes would be increased by Cess of 3% of the total taxes including the surcharges
The Corporate Tax structure is as follows:
The Above taxes should be added by a cess of 3% on total taxes including surcharge
The Tax rates for remaining forms of business would remain the same.
Conclusion:
1. The pre-budget expectations had said that the slab rate would be increased but the FM making a smart move, lowered the tax rates which ensured the tax filing which is required to file for person having a gross total income taxable under slabs. If these slabs were to change then many of taxpayers would have been escaped with a compliance to file Return of Income which would be in contradiction to the Government’s objective of make people more tax compliant.
2. The reduction in Corporate tax Rate is a welcome step as to promote ease of doing business, but the benefit of this provision will be available only to small companies and not to big corporate at large.
3. The Government, in course of making the individuals to encourage filing of returns have made the slab rates more complex and also made the life of the high income groups more difficult by insertion of surcharge for attaining the objective of narrowing the income gap between the richer and the poor.
By Sameer Dosani.