Prime Minister Narendra Modi threw his weight behind the decision to slash income tax, said Finance Minister Nirmala Sitharaman on Sunday. However, she added that it took time to convince the bureaucrats.
The Finance Minister was referring to the Budget announcement on no tax payable up to Rs 12 lakh salary with a focus on the Indian middle class. This is expected to boost household consumption in the country as lowering taxes would encourage people to spend more.
Sitharaman said Modi was clear on cutting the tax rate. "It is for ministry to have had the comfort level and then go with the proposal," she said, adding that it required more work to convince the board about the efficiency in collecting tax and listening to honest taxpayers."
With the cut on income tax rates, the government has reportedly forgone Rs 1 lakh crore in direct taxes and Rs 2,600 lakh crore in indirect taxes.
She then went on to add, "The Prime Minister always listened to people from different sectors. He meets them, interacts with them, gets their inputs... just as he would also talk with the most deprived sections or let's say the tribals, particularly the vulnerable tribal groups."
"Just as the President was very keen on addressing their problems, PM also listens to all sections... So, I am very happy to be part of this government, which literally hears the voice and responds," she added.
The tax slabs in the next tax regime are Rs 0 to 4 lakh: Nil; Rs 4 to 8 lakh: 5 per cent; Rs 8 to 12 lakh: 10 per cent; Rs 12 to 16 lakh: 15 per cent; Rs 15 to 20 lakh: 20 per cent; Rs 20 to 24 lakh: 25 per cent; and Rs 24 lakh and above: 30 per cent.
The finance minister increased the rebate under section 87A from Rs 25,000 to Rs 60,000, effectively nullifying the 10 per cent tax on Rs 12 lakh income. This is not applicable for incomes such as capital gains.
