The Union Budget 2017-18, announced by the Finance Minister Arun Jaitely, brought about a huge relief to Small, Medium enterprises and middle class section of the society.
In a major step, Finance Minister has halved the rate of taxation from the existing 10 per cent to 5 per cent for individuals earning between income of Rs. 2. 5 Lakhs to Rs. 5 Lakh. He has cut a Rs 5,000 rebate on tax, currently given to these assesses by half to Rs. 2500 and said that rebate would only apply now to those earning up to 3-5 lakhs a year. It means that people earning up to 3 lakhs a year will pay no income tax after the rebate of Rs. 2500.
The individuals with income bracket of Rs 3 to 5 lakhs will also benefit from this move as they will save up to Rs 7500 a year.
Making the announcement, Finance Minister said, ‘I propose to reduce the existing rate of taxation for individual assesses between incomes of Rs 2.5 lakhs to Rs 5 lakhs to 5 per cent from the present 10 per cent. This would reduce the tax liability of all persons below Rs 5 lakh income either to zero or 50 per cent of their existing liabilities.’
Other tax related announcements
The Tax rates of Small and Medium enterprises have also been cut. Companies with an annual turnover of up to Rs 50 crore will now pay 25% as tax instead of earlier 30%. The move is expected to benefit 96% of the companies in the country.
Speaking on this move, Founder and CEO of Clear tax.com, said, ‘The Finance Minister has announced massive reforms in tax rules including audit and book keeping rules for small and medium enterprises. This is bound to boost compliance amongst smaller taxpayers. We support this move for businesses which have suffered loss of business due to demonetization.’
Arun Jaitely imposed a surcharge of 10% for those whose annual income is Rs. 50 lakh to Rs 1 crore. The 15% surcharge on income above Rs 1 crore will continue.
Jaitely also reduced the holding period of long-term capital gains tax on property to 2 years from 3 years.
Simple one-page form will be required to be filled for individuals having taxable income up to Rs 5 lakhs. The citizens falling under the income bracket of Rs 2.5 lakhs to Rs. 5 lakhs will pay 5% tax as contribution towards nation building.
The proposals made by the Finance Minister are seen as an attempt to reward the taxpayers and taxing the rich.