New Delhi: In a major relief to small taxpayers, Union finance minister Arun Jaitley on Wednesday slashed personal income-tax to 5 per cent from 10 per cent on income of Rs 2.5 lakh to Rs 5 lakh.
He proposed to levy a surcharge of 10 per cent on individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore. The existing surcharge of 15 per cent of tax on people earning more than Rs 1 crore will continue. However, the Budget has proposed a fee for delayed filing of income-tax return.
A fee of Rs 5,000 shall be payable, if the return is furnished after the due date but on or before the December 31 of the assessment year.
A fee of Rs 10,000 shall be payable in any other case. But in a case where the total income does not exceed Rs 5 lakh, the budget proposed that the fee amount shall not exceed Rs 1,000.
Mr Jaitley said that his proposal to slash personal income tax to 5 per cent on those with income of Rs 5 lakh would reduce their tax liability either to zero (with rebate) or 50 per cent of their existing liability.
“These measures will mean that there would be zero tax liability for people getting income upto Rs 3 lakh per annum and the tax liability will only be Rs 2,500 for people with income between Rs 3 lakh and Rs 3.5 lakh.
If the limit of Rs 1.5 lakh under Section 80C for investment is used fully the tax would be zero for people with income of Rs 4.5 lakh.
Mr Jaitley said all the other categories of taxpayers above Rs 5 lakh will also get a uniform benefit of Rs 12,500 per person.
“The new levy of surcharge of 10% on income levels between Rs 50 lakh and Rs 1 crore will result in additional tax liability by almost Rs 2.77 lakh at the top end of this income range,” said Alok Agrawal, senior director, Deloitte Haskins & Sells.
“For such taxpayers, the increase in tax liability for 2017-18 will be approximately 9.5% over their annual tax liability under the current tax rates,” said Mr Agrawal.
Mr Jaitley said there will be no scrutiny of assessees filing income-tax returns for the first time. Individuals having taxable income up to Rs 5 lakh can just fill up a simple one-page form for filing their tax returns. Meanwhile income-tax officers can now reopen tax cases for up to 10 years if search operations reveal undisclosed income and assets of over Rs 50 lakh.
Currently, I-T officers can go back up to six years to scrutinise the books of accounts of assesses.
