According to sources in the last Budget, Finance Minister Arun Jaitley left the slabs unchanged but gave marginal relief to small tax payer by reducing the rate from 10% to 5% for individuals having annual income between Rs. 2.5-5 lakh. Meanwhile in the next Budget to be unveiled on February 1, the government could lower tax rate by 10% on income between 5-10 lakh, levy 20% rate for income between Rs.10-20 lakh and 30% for income beyond Rs. 20 lakh. At present, there is no tax slab for income between 10-20 lakh.
Although the industry chambers want the government to reduce peak tax slab to 25 per cent, it is unlikely that the ministry will agree to that due to pressure on fiscal deficit. The subdued indirect tax collection following roll out of Goods and Services Tax from July 1 last year has put pressure on the fiscal deficit, which has been pegged at 3.2% of the GDP for 2017-18.
Moreover the government recently raised borrowing target by
additional Rs.50,000 crore for the current fiscal to meet the shortfall.
Accordingly the standard deduction, which was available to the salaried
individuals on their taxable income, was abolished with effect from assessment
year 2006-07.
