Narendra Modi govt may hike base Income Tax slab from Rs 2.5 lakh to Rs 4 lakh, says report; spokesperson terms it ‘baseless’

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New Delhi | Updated: December 19, 2016 8:24 PM

Modi government is reportedly considering a proposal to revise the base Income Tax tax slab and increase it up to Rs 4 lakh per annum

tax slab, tax slab revision, tax slab hike, base tax slab, income tax, demonetisationThe Narendra Modi government may increase base Income Tax slab up to Rs 4 lakh per annum.

Facing criticism from the opposition over demonetisation, the Narendra Modi government is considering a proposal to revise the base Income Tax slab and increase it up to Rs 4 lakh per annum from the current Rs 2.5 lakh per year, according to a report by India Today news channel.

The channel reported that the government may announce revised tax slabs before the announcement of Uttar Pradesh assembly election dates.

Quoting sources, India Today also said while people in the Rs 4-10 lakh income group may be taxed at 10%, 15% tax is likely for the 10-15 lakh income group. Similarly, while people in the Rs 15-20 lakh income group may have to pay 20% tax, 30% tax may be imposed on those having income above Rs 20 lakh.


If implemented, the new tax proposals will give a huge relief to taxpayers reeling under the impact of high inflation and high tax rates.

Currently, income up to Rs 2.5 lakh is exempt from tax, income from Rs 250,001 to Rs 5,00,000 is taxed at 10%, from Rs 5,00,001 to Rs 10,00,000 at 20% and above Rs 10 lakh at 30%.

However, government spokesperson Frank Noronha rejected the report about new income tax slabs. ANI reported him calling it “‘baseless and unfounded”.

Earlier on December 14, Union Finance minister Arun Jaitley had indicated that the government may reward the common man by lowering both direct and indirect tax rates in Budget FY18 as demonetisation is set to expand the tax net.

While the central bank is remonetising by constantly releasing new banknotes, which would be “significant” in the next three weeks, Jaitley said the strategy is to make future transactions substantially digital to reduce dependence on cash. “Once they (black money hoarders) are substantially digital, they will get caught in the tax net,” he said.

“Therefore, the future taxation level would be much higher than what is currently being collected. This would also enable the government at some stage to make taxes more reasonable which will apply to both direct and indirect taxes,” the minister said.

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