Income Tax deduction for housing loan may increase upto 3 Lakh...

Exempt income up to Rs 3 lakh from I-T: Parliamentary panel

The skewed personal income tax collection pattern of the government has prompted the Parliamentary Standing Committee on Finance to suggest moderately higher taxes for those who earn more and greater relief for small taxpayers. In fact, it has suggested that the tax should kick in only at annual income levels of Rs 3 lakh and more.

According to latest data collected by the Income Tax department, of the 300 million taxpayers in the country, just 1,85,000 individuals earn over Rs 20 lakh a year. But this small group pays Rs 53,170 crore in personal income tax. The broad categorisation of tax payers shows that individuals in Rs 0-10 lakh comprise almost 92 per cent of the total taxpayer base, but they contribute only Rs 21,094 crore, less than 40 per cent of the amount collected as taxes from the small group earning over Rs 20 lakh a year. The tax payers within the income slab of Rs 10-20 lakh per annum — 3.35 lakh tax payers — paid Rs 10,185 crore to the government, the data showed.

The stark contradiction has prompted the standing committee to suggest that the government should restructure the current tax regime, making it more progressive so that individual tax payers and corporate can be shielded from regressive effects of the present structure. Accordingly, the committee suggests that the tax slab attracting nil rate should be raised from Rs 2 lakh proposed in the Direct Tax Code to Rs 3 lakh so that the department can channelise its resources in minimising the compliance and transaction cost.

“The character of the tax regime should change and it should be made more progressive. This would entail greater relief for small tax payers—both individuals and corporate — and moderately higher rates for tax payers in the higher bracket,” the Parliamentary panel has said.

The panel, currently vetting the proposed DTC has questioned the rationale of the existing tax slabs pointing out that most taxpayers — 2.02 crore of the total 3 crore — fall under the income slab of Rs 0-2 lakh. The number of tax payers further falls to 56.73 lakh in the income slab of Rs 2-4 lakh, making it around 72 per cent in the lowest income bracket for tax purposes. The panel noted that the department should not “diffuse their energies and spread their resources thin over handling such a large number of tax payers with low income potential”.

Another anomaly, the committee has said, lies in the corporate tax structure.

The data shows that the tax collected in the income slab of Rs 0-100 crore is Rs 44,016 crore while that in the income slab of Rs 100-500 crore is Rs 23,421 crore, and Rs 54,558 crore in the above Rs 500 crore slab.

Greater relief

* Let those who earn more pay moderately higher taxes, Parliamentary panel tells government on DTC

* Suggests restructuring the current tax regime so that tax payers can be shielded from regressive effects of the present structure

* Committee says that tax slab attracting nil rate should be raised from Rs 2 lakh proposed in the Direct Tax Code to Rs 3 lakh

Source: Indian Express
[http://m.indianexpress.com/news/exempt-income-up-to-rs-3-lakh-from-it-parliamentary-panel/911271/]

Comments

Anonymous said…
MPs want IT exemption limit Rs. 5 Lakhs...
MPs want IT exemption limit Rs. 5 Lakhs..!
MPs want IT exemption limit Rs. 5 Lakhs.......!
P.K.Pattnayak(BSF) said…
p k pattnayak said:having seen their duties the Tax exemption limit should be five lakhs for All paramilitary forces.
P.K.Pattnayak said…
tax exemption limit should be 5 lacks
for paramilitary/military .
for employees it should be 5 lakhs IT excemption required.
ramana murthy.cheruku .kurnool.I&B Department.
devis said…
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