Know why you have to pay less income tax in 2018!

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The Narendra Modi-led BJP government will present its last full-year budget on February 1 next year. There are chances that it will announce measures to make the tax system reasonable and simple.

Finance minister Arun Jaitley is likely to come up with some measures in the Union Budget for 2018-19 bringing relief to crores of tax payers in the country.

The finance ministry has already issued the official circular for preparation of budget following which work on the last full-year has begun.

The government is likely to prepare the budget eyeing the 2019 general elections. The opposition parties are already targeting them on demonitisation, GST and continuous rise in fuel price. So, the government is seeing the upcoming budget as an image makeover.

The government is likely to prepare the budget eyeing the 2019 general elections. The opposition parties are already targeting them on demonitisation, GST and continuous rise in fuel price. So, the government is seeing the upcoming budget as an image makeover.

On the taxation front, both indirect and direct taxes, the government will have a tough time. With the GST in place, the GST council will take all the decisions related to indirect tax.

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Here, the finance minister will make a good move by bringing in the required changes in the GST, especially reducing the rates and merging the 12% and 18% rates into one. Inclusion of the petroleum products in the GST structure will also be a good move.

However, the most important area where changes are needed is direct taxes. Prime Minister is reportedly in favour of easing the tax burden as the corporate tax rate has already been reduced from 30% to 25% for companies having an annual turnover of up to Rs 50 crore.

The government is also likely to raise the top 30% personal income tax (PIT) slab from the current Rs 10 lakh.

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, reported The Financial Express.

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