Budget 2014-15 – Will there be any changes in tax slabs?:
It is expected that when the annual budget for 2014-15 fiscal is announced it will be a good one for the people who earn regular salaries. This is because the newly elected administration is looking to resurrect the tax system of India. It is expected that the Indian government will be making INR 3 lakh per year the new limit when it comes to granting people exemption from taxes on their incomes. At present the tax system operates with 3 slabs. People who earn INR 2 lakh a year or less are not supposed to pay taxes.
However, for people who are making INR 2-5 lakh a year there is an obligation to pay income tax at the rate of 10 per cent. For people who are earning between INR 5-10 lakh in a year the applicable tax rate goes up to 20 per cent and for ones who are grossing more than INR 10 lakh a year the rate is 30 per cent. This is why it is being assumed that if the Indian government eventually decides to increase the maximum limit of exception it will be a huge benefit for the people who pay taxes.
With the greater tax slab people under the said bracket shall have more money to spare and thus their lives will be a little bit easier for that. This is expected to bring about a general surge in the level of savings that in turn could lead to an increase in the levels of consumption and investment thus benefiting the economy in general. One of the major areas of emphasis for the Narendra Modi administration is to revive the economy and experts are of the opinion that by helping the economically oppressed middle class, the Prime Minister will be making a major statement.
The present economic condition of India means that the government is in no position to increase the tax revenue by a significant margin. The government’s expenses on subsidies as well as the payment it is supposed to make on interest are going up with every passing day. In some circles within the national administration it has also been proposed newer sources of revenue should be generated so that the pressure on the tax sector can be lessened to a certain extent.
When the BJP had campaigned for the 2009 national elections it had promised that it will take up the basic tax exemption amount to INR 3 lakh and there would be an added exemption for senior citizens and women to the tune of INR 50 thousand. It had also promised there would be no taxes on bank deposits as well as zero taxes on pension for people older than 60 years. However, this time it has not been so forthcoming and this has made it hard for anyone to make anything but predictions that are based more on potential.