Union Budget 2017-18: How tax proposals will affect you

Union Budget 2017-18: How tax proposals will affect you
Union Budget 2017-18: How tax proposals will affect you

New Delhi: While presenting the Budget for the financial year 2017-18, Finance Minister Arun Jaitley on Wednesday proposed  to  reduce  the  existing  rate  of  taxation  for  individual assesses between income of Rs 2.5 lakhs to Rs 5 lakhs to 5% from the present rate of 10%.

This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50% of their existing liability.  

In  order not to  have  duplication  of  benefit,  the  existing benefit  of  rebate  available to the same group of beneficiaries is being reduced to Rs 2,500 available only to assessees upto income of Rs 3.5 lakhs.

The combined effect of both these measures will mean that there would be zero tax liability for  people  getting  income  upto Rs 3  lakhs per annum and  the tax liability will only be Rs 2,500 for people with income  between Rs 3 and Rs 3.5  lakhs.    

If the limit of Rs 1.5 lakh under Section 80C for investment is used fully the tax would be zero for people with income of Rs 4.5  lakhs.

While the taxation liability of people with income up to Rs 5  lakhs is  being  reduced  to  half,  all the other categories of  tax  payers in the  subsequent  slabs will also get a uniform benefit  of Rs 12,500/-per  person.  

The total amount of tax foregone on account of this measure is Rs 15,500 crores.

In order to make good some of this revenue loss on account of this  relief,  the government proposed to levy a surcharge of  10% of tax  payable on categories of individuals whose annual taxable income is between Rs 50 lakhs and Rs 1 crore.
 
The existing surcharge of 15% of tax on people earning more than Rs 1 crore will continue. This is likely to give additional revenue of Rs 2,700 crores.

In order to expand tax net, the Finance Minister also said that a simple  one page form to be filed as income tax return for the category of individuals having taxable income  upto Rs 5 lakhs other than business income.  

Also a person of  this  category  who  files  income tax  return  for  the  first  time  would  not  be subjected to any scrutiny in the first year unless there is specific information  available with the department regarding his  high  value  transaction.   

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