9Wiki

The Encyclopedia

Budget 2018: Finance minister Arun Jaitley leaves rich poorer, poor not much richer

Today we are talking about Budget 2018: Finance minister Arun Jaitley leaves rich poorer, poor not much richer, check out the Budget 2018: Finance minister Arun Jaitley leaves rich poorer, poor not much richer with complete details and accuracy At 9wiki.info.

Check down the table for Budget 2018: Finance minister Arun Jaitley leaves rich poorer, poor not much richer By 9wiki – The Encyclopedia We are always providing right details you can comment below if you found any irrelevant content of celeb.

NEW DELHI: When it comes to personal income tax, finance minister Arun Jaitley gave with one hand and took away with the other. While he reintroduced standard deduction — it was scrapped in 2004-2005 — Jaitley did away with medical and transport allowance, except for differently abled persons, and hiked cess from existing 3% to 4%.

The standard deduction is now Rs 40,000, which will translate into a small saving of Rs 194 for a taxpayer with an income of Rs 5 lakh and Rs 150 for an assessee with income of Rs 10 lakh. But for taxpayers in a higher income bracket, the new tax measures will actually increase liability.

According to a calculation provided by PWC, the tax liability on income of Rs 25 lakh will increase by Rs 3,713 and the liability for income of Rs 75 lakh by Rs 20,584. In fact, at an income of Rs 12,62,400, the benefit from Rs 40,000 standard deduction will be completely offset by the loss due to additional 1% cess.


Read: Full text of Arun Jaitley’s Budget speech



Under the earlier regime, an assessee could get deduction of medical expenses up to Rs 15,000 upon production of bills under Section 17(2) and a transport allowance of Rs 19,200 under Section 10(14)(ii).

In total, an assessee used to avail deduction of Rs 34,200 against medical and transport allowances. In the new system, there is a lumpsum standard deduction of Rs 40,000.

The one benefit is that now an assessee will not have to save and furnish medical bills. So far, as transport allowance goes, bills are not required to be produced even today.

Though there was an expectation that tax slabs would be revised, the FM left them unchanged. He also stressed an important point — the average tax paid by a salaried class taxpayer is higher at Rs 76,306 as against average tax of Rs 24,753 paid by individual business taxpayer.

tax-burden-graphic-ed

He said apart from reducing paper work and compliance, the decision to allow standard deduction will also benefit the pensioners, who normally do not enjoy any allowance on account of transport and medical expenses. Standard deduction is essentially a flat amount subtracted from the salary income before calculation of taxable income.

It was a part of the Income-tax Act until former finance minister P Chidambaram withdrew it in the Union Budget of 2005-06.

The simplicity of calculation of standard deduction was its main advantage. It did not require any disclosures, investment proofs or bills.

The revenue cost of this decision is approximately Rs 8,000 crore. The total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crore.

On cess front, at present there is a 3% cess on personal income tax and corporate tax. The breakup is 2% cess for primary education and 1% cess for secondary and higher education.

In order to fund the cost of providing education and health of BPL and rural families, finance minister has replaced this by a 4% health and education cess to be levied on the tax payable.

The extra burden imposed on taxpayers will enable the government to collect an estimated additional amount of Rs 11,000 crore.

Updated: February 1, 2018 — 7:01 pm

Leave a Reply

Your email address will not be published. Required fields are marked *

9Wiki © 2017