New Delhi: The Shiv Sena on Thursday submitted a memorandum to Finance Minister Piyush Goyal and demanded that income tax exemption limit should be raised from Rs 2.5 lakh to Rs 8 lakh. Rajya Sabha MP Anil Desai said a four-member party delegation met the Union minister.
The memorandum stated that since the government has taken the decision of giving EWS quota to people earning up to Rs 8 lakh, income tax for this group should be waived. The government has admitted that people in this income group are poor, so they must be exempted from paying taxes, he said.
However, it was earlier reported that the government is likely to double the income tax (I-T) exemption threshold for salaried taxpayers from the present Rs 2,50,000 to Rs 5,00,000.
At the moment, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax (see table), while that between Rs 5-10 lakh is levied with a 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent. Rs 5 lakh exemption is only applicable to individuals of over 80 years.
Also, tax-free medical expenses up to Rs 15,000 and transport allowance up to Rs 19,200 per annum has been replaced with a Rs 20,000 standard deduction for those earning above Rs 5 lakh last year. This will benefit taxpayers to the tune of Rs 12,500 annually which is not much but can be viewed as a sentiment buster.
With acute farm distress, middle-class backlash, massive spike in unemployment data and rising Dalit anger taking its toll on the BJP, it would like to unleash a slew of course correctives. The 10 per cent quota for upper castes was part of this process to appease vote banks. But this was an executive decision adopted by parliament, tinkering with the tax structure similarly is a legislative decision.
In the 2017 Budget, Finance Minister Arun Jaitley had proposed to reduce the existing rate of taxation of those with income between Rs 2.5 lakh to Rs 5 lakh from 10 per cent to 5 per cent.