​​ ​
  1. Budget 2017: Income and corporate tax set to fall courtesy demonetisation; learn why

Budget 2017: Income and corporate tax set to fall courtesy demonetisation; learn why

As the Budget 2017-18 is drawing closer, a significant moderation in the direct tax incidence on a vast majority of taxpayers is increasingly looking certain.

By: | Updated: December 27, 2016 1:33 PM
Union Budget 2017, Arun Jaitley, Demonetisation, Cash Ban, personal taxation As the Budget 2017-18 is drawing closer, a significant moderation in the direct tax incidence on a vast majority of taxpayers is increasingly looking certain. (Source: Reuters)

As the Budget 2017-18 is drawing closer, a significant moderation in the direct tax incidence on a vast majority of taxpayers is increasingly looking certain. On the personal taxation (PIT) side, taxpayers at the bottom of the pyramid — those with annual tax outgo of less than R2 lakh and forming over 80% of the PIT base– could get the highest benefit as both the exemption threshold and the slabs are being restructured.

Corporate tax rate could also see a steep reduction, of even 3 percentage points, to 27%, in line with the 2015-16 budget announcement to bring it down to 25% in four years. Last year, the finance minister had virtually gave the tax reduction plan a pass, as he reduced the rate to 29% for firms with turnover up to Rs 5 crore and left the rate for others unchanged at 30%.

The PIT recast, despite the gains to the small taxpayers, won’t need a big revenue sacrifice while it could give a significant boost to consumption: Just over a quarter of the the government’s PIT income comes from those with annual tax outgo of less than R2 lakh. At the same time, the post-demonetisation crackdown on tax evaders would help expand the tax net, besides enhancing, on a permanent basis, the tax liability of a large number of assessees, sources explained. Government officials had earlier talked about a R2 lakh crore target under the new income disclosure scheme PMGKY, with a tax rate of 50%.

A 3 percentage points cut in corporate tax rate could, however, be more onerous on the exchequer, but the government reckons that with the stricter implementation of steps to curb tax evasion and frustrate aggressive tax planning — and with the phasing out of exemptions —, the revenue drain could be minimised.
n Continued on Page 2

With the continued sluggishness – if not decline – in private investment and stressed top-lines of corporates, lowering the tax rate has become an imperative, the sources added.
On Sunday, a day after the prime minister lamented low or zero tax rate for certain types of financial income and said that this could be increased it in a fair, efficient and transparent way, the finance minister Arun Jaitley said no such plan was in the offing, but the markets, which feared reintroduction of long-term capital gains tax, were not fully pacified (the sensex lost 233 points on Monday). Jaitley on Monday said at a revenue department function that “a lower level of taxation that is globally compatible is necessary if the country has to have a broader base of economy.” He said gone were the days of the philosophy that high taxation would bring greater revenues and that since 1991 the course of economy had altered itself. “And the mindset of the tax payer (should be) that payment of legitimate taxes is a responsibility and then it should be reciprocated by you with a confidence in the tax payer.

The taxpayer is to be trusted, except when it’s proven otherwise. And therefore only in those select cases, very objectively selected, you go in for a wider audit or a wider scrutiny itself,” Jaitley said. “There are no grey areas in taxation laws. It’s either black or white. It’s either payable or not payable. And therefore to discover grey areas in fiscal laws is not possible, that’s the same principle that applies to criminal law also, either an offence has been committed or not committed,” the minister said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top