1. PM Narendra Modi may finally reduce income tax burden in 2018-19

PM Narendra Modi may finally reduce income tax burden in 2018-19

Given that 2018-19 budget to be presented on Feb 1 next year will be the last full-year budget of the current NDA government led by prime minister Narendra Modi, the chances of finance minister Arun Jaitley announcing measures to make the tax system reasonable and simple, are quite high.

By: | Published: September 15, 2017 7:14 PM
income tax, income tax news, income tax latest news, income tax norms, income tax latest norms, income tax guideline, income tax, narendra modi, narendra modi government In the next budget to be presented on February 1, the government will have to bring the passage of these legislations to the centre stage before going into the next general elections. (PTI)

Given that 2018-19 budget to be presented on Feb 1 next year will be the last full-year budget of the current NDA government led by prime minister Narendra Modi, the chances of finance minister Arun Jaitley announcing measures to make the tax system reasonable and simple, are quite high.

With the finance ministry issuing the official circular for preparation of the Union Budget for 2018-19, the work on the last full-year budget of the current NDA government led by prime minister Narendra Modi has begun.

This budget will certainly have a bearing on the government’s prospects in the next Lok Sabha polls, due in 2019, and finance minister Arun Jaitley has the critical responsibility of delivering a growth-oriented budget that takes care of investment and job concerns.

In reality, though, being the last full budget of PM Modi’s current tenure, it may turn out to be a populist one even if the space for doles and benefits is limited with the GDP growth expected to be less than 7% in the current financial year.

While the government has done well by getting crucial legislations passed in parliament during its tenure – Bankruptcy Code, Aadhaar Bill and Goods and Services Tax (GST) are among the prominent ones – it has failed in making headway in the land acquisition and labour law changes, which are important for pushing the infrastructure development and job creation.

In the next budget to be presented on February 1, the government will have to bring the passage of these legislations to the centre stage before going into the next general elections.

The bigger challenge, however, for the government would be on the taxation front, both indirect and direct taxes.

On indirect taxes, though with GST in place, all the decisions will have to be taken by the GST council, FM Jaitley will do well by outlining the required changes in the GST structure going ahead, especially the reduction in the number of rates and if possible merging of the 12% and 18% rates into one, and inclusion of the petroleum products in the GST structure, in the budget.

But, the most important area where major changes are needed is direct taxes, and PM Modi has already hinted at the need to lessen the tax burden here.

The corporate tax rate has been reduced from 30% to 25% for companies with annual turnover up to Rs 50 crore. This has to be extended to other companies now along with the removal of exemptions – it’s a commitment of the government made in the 2015 budget and FM Jaitley needs to find ways to do this.

The real challenge, though, would be to raise the top 30% personal income tax (PIT) slab from the current Rs 10 lakh, which is quite low, to the DTC 2009 proposed Rs 25 lakh in a phased manner if it is not possible to do in one go.

The current PIT structure of, 5% rate for income between Rs 2.5 and Rs 5 Lakh, 20% for Rs 5-10 lakh bracket and then 30% for above Rs 10 lakh needs to be altered to reduce the tax burden on the people, even if there is a possibility of attracting severe criticism to the weeding out of the tax benefits that will be an essential part of this exercise.

PM Modi and FM Jaitley must grab this opportunity of establishing a reasonable, clean and easy to operate direct and indirect tax structures in the next budget, which may ultimately prove to be a win-win formula in terms of political gains and reforms also.

Get latest news and updates on Auto Expo 2018, check breaking news on Budget 2018, like us on Facebook and follow us on Twitter.

  1. D
    dhananjay
    Dec 15, 2017 at 8:12 pm
    keep slabs as follows: 1. 5 lakhs to 15 lakhs- 15 2. above 15 lakhs 25 Make all returns on long term savings ( more than 10 years for retirement) under a uniform slab of 10 at time of withdrawl
    Reply
    1. B
      b k mishra
      Dec 4, 2017 at 9:19 pm
      After winning 2014 election I remember that Sri Piyush Goal sir spoke on CNBC that ried class people may be either relaxed or low tax to be burden on them because govt not getting big amount as Income tax.But he become coal minister unfortunate for the ried class We were hopeful that he would have been finance minister.Any way requesting govt to increase slab.
      Reply
      1. B
        b k mishra
        Dec 4, 2017 at 9:27 pm
        ried class means ried class.
        Reply
        1. B
          b k mishra
          Dec 4, 2017 at 9:29 pm
          ried class means ried class.who get ry monthly.
      2. R
        Rajesh Jain
        Dec 4, 2017 at 5:20 pm
        This is very unfortunate that every Indian has to pay heavy taxes. It is really difficult to meet monthly expenses even you earn good amount like 1 lakh per month. I am surprised that almost 30 of the income goes as income tax that means we are working for 3-1/2 months for Govt. Apart from this after paying income tax when I buy a house (somehow) I have to pay registry charges and interestingly then every year property tax. Then I buy a car (.....somehow) I have to pay various taxes then in a queue to pay Toll Tax. Seems no one is there to understand the pain of a common man. Politicians are making huge money and(for sure) they will not be able to use that much amount. Most of this property/amount is going to be complete waste. Better, they serve MAA BHARTI with honesty and understand the pain of every tax payer and come forward to lower the tax burden from common man.
        Reply
        1. Rajesh Kumar
          Nov 20, 2017 at 4:19 pm
          India is possibly single country in the world where personal tax are more than corporate tax. People earning more than 10 lacs pay 30 but corporate earning 50 crore pays 25 tax..Not even that, even after paying 30 tax you still need to pay roughly 25 in other taxes. so half of the incomes goes in tax only. moreover you have to pay heavy fee in school and healthcare because govt. support is non existent in education and healthcare. In contrary our Netas don't pay a single penny in tax, not only that gets all exemption, pensions and benefits for the whole life even if he has been MP or MLA for a single day. Is this a justice?, certainly not but most of the people of this country are fool and don't understand their rights and privilege, that's the reason we are in this shape today. if you start raising genuine issues these netas will create communal controversies to keep you diverted from core issues. So wake up else will be tool late..
          Reply
          1. S
            sanjay
            Dec 4, 2017 at 4:49 pm
            I do agree with Mr. Rajesh Kumar. If government is taking 30 of our earning in direct taxes all the tax payers should get finest quality of health care, education and old age social security free for sure.
            Reply
          2. P
            Prem Anand Narayan Shetty
            Sep 19, 2017 at 8:33 am
            The confidence with which this Govt. went ahead with unpopulist measures of demonetisation, GST and many is unprecedented which may not be good for PM Modi ji / BJP/ RSS but for the good of Bharat. Th4, the benefits of GST, De-Monetisation and other measures taken must be reflected in next budget by reduction in Tax accross and increase in Employment is crucial apart from giving boost for the Growth of the Economy.
            Reply
            1. Joy Roychowdhury
              Sep 17, 2017 at 12:48 pm
              and I am sure it would be definitely a peanut . they would increase 50k and thump their chest . I don't trust this govt any more .
              Reply
              1. A
                Abhishek
                Nov 1, 2017 at 1:04 pm
                50k relaxation for you, is 50,000 crore less for the governments taxation
                Reply
              2. M
                M GA
                Sep 16, 2017 at 11:35 pm
                ST people with higher pay, good housing, costly motor car are enjoying tax exemption. What a system ? Does not feel like working.
                Reply
                1. Parthasarathy MP
                  Sep 16, 2017 at 6:44 pm
                  For the past three years our FM aim was to squeeze the people, atleast in this budget he has to rise the limit of taxable income as well as changing of tax slabs plus reducing tax rates. The ried employees are fed up by paying higher tax and reduced income.
                  Reply
                  1. P
                    Pawar Ashok
                    Sep 16, 2017 at 3:37 pm
                    govt has to think about the ry people of india
                    Reply
                    1. P
                      Pawar Ashok
                      Sep 16, 2017 at 3:37 pm
                      yes. govt has to think about the ried employees.
                      Reply
                      1. A
                        AKB
                        Sep 16, 2017 at 8:51 am
                        He should reduce the tax exactly one week before the elections then he has proved himself.
                        Reply
                        1. M
                          Mamillamanohar
                          Sep 16, 2017 at 5:34 am
                          It is better to the people who pays the income tax because cost of living is also increased even small areas also.savings should be increased further investments increased.through this economy growth is high.
                          Reply
                          1. V
                            Vivek
                            Sep 16, 2017 at 3:00 am
                            How is that going to ease the tax burden when, year after year, other direct and indirect taxes are raised? Modi giveth with the one hand, and taketh away with the other.
                            Reply
                            1. A
                              Ashish Lodha
                              Sep 16, 2017 at 1:18 am
                              The slab provided in article is incorrect For 2.5 lacs to 5 lacs tax percentage are 10 and not 5
                              Reply
                              1. M
                                Madhav Ahuja
                                Sep 16, 2017 at 4:23 pm
                                In last budget it has been reduced to 5
                                Reply
                              2. Load More Comments

                              Go to Top