Finance Minister Arun Jaitley on Wednesday said the 2017-18 budget was one of its kind where every taxpayer was liable to pay reduced taxes.
“It is the first budget in which every taxpayer has reduced tax liability. While the tax liability of people with incomes of up to Rs 500,000 is proposed to be reduced by half, all other categories of taxpayers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person,” Jaitley told DD News in an interview.
In a relief to the middle class, Jaitley proposed in the budget to halve the income tax to 5 per cent for those earning between Rs 250,000 and Rs 500,000 per annum.
“This will reduce the tax liability of all persons with incomes below Rs 500,000 either to zero (with rebate) or 50 per cent of their existing liability. It has been done to widen the taxpayer base in the lower slab to bring the non-filers into the tax net,” he said.
Jaitley said the reduction in the income tax for smaller companies was necessary after demonetisation as they were the major job creators.
“Post-demonetisation, I had a promise to keep to help the micro, small and medium enterprises (MSMEs) sector. MSMEs are the job creators,” he said.
In order to make MSME companies more viable and also to encourage firms to migrate to the company format, the budget proposed to reduce the income tax on smaller companies with annual turnovers of up to Rs 50 crore to 25 per cent.
As per the data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns, of which 6.67 lakh fall in this category and, therefore, percentage-wise 96 per cent of companies will get this benefit of lower taxation.
“This will make our MSME sector more competitive compared with large companies. The estimated revenue forgo vis-a-vis this measure is expected to be Rs 7,200 crore per annum,” Jaitley said in his speech.