Standard deduction increase limit from 40,000 to 4 lakhs– in Finance bill, 2018
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Standard deduction for salaried class – in Finance bill, 2017
The Finance bill (“the Budget), 2017 is expected to be presented last week of January/ early February 2017 before Parliament. Hence, it is important to put our wish list / issues before the Prime Minister / Finance Minister of India.
Every budget has been ignoring the needs of reduction of tax for salaried class. Individuals having business are allowed to pay income-tax on their net income after allowing related business expenditure whereas a salaried class individual is required to pay taxes on gross salary (with miniscule allowance).
There used to be standard deduction of 30% from gross salary for salaried class which has been removed by Congress Government in 2006.
As most of us are aware, the annual increment in the salary (which in most cases is not very significant) would not be sufficient as compared with the corresponding increase in indirect taxes which have been steadily increasing each year. For instance, the Government has increased gamut of service tax scope and have consistently increased the rate of service tax and cess without providing any corresponding direct tax relief for salaried class. The food prices, petrol prices, real estate prices are soaring up which is much beyond the annual increment in salary.
The Hon’ble Finance Minister Mr. Arun Jaitley had mentioned in his Budget speech in 2015 that corporate tax rate will be reduced to 25% in a phased manner in the next 4 years. Among others, Yoga income, dividend income, etc are exempt from tax. However salaried class continue to be burdened with a high tax rate of 30%. Hence, Maximum Marginal rate should be brought down from 30% to 25% which would be at par with tax rate applicable to Companies. With the implementation of Goods & Service Tax and lowering of threshold for applicability of GST, the Government is likely to collect higher taxes and hence, it may be worthwhile to pass on some of this benefit to the salaried class.
Hence, request everyone to sign my petition and request the Prime Minister / Finance minister for giving the standard deduction of 30% on salary income and lower the tax rate applicable to salaried individuals and being it on par with the corporate tax rate which is likely to be 25%. The revenue deficit can be recouped through the increase in the GST revenue for the Central Government.
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