This is a great saying by the former President of the United States, Franklin Roosevelt, “Taxes are paid in the sweat of every man who labors.” Yes, you and all citizens of our country, are waiting to hear some good news in the Union Budget 2017-18. What better news than income taxes being cut?
The Finance Minister, Arun Jaitley, has hinted at lower income taxes in the Union Budget 2017-18. The Union Budget 2017-18, will be announced on February 1st 2017. This is a month earlier than usual. Guess….you won’t have to wait too long, to hear the good news.
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The Finance Minister Arun Jaitley, would like a lower level of taxation, which is globally compatible. The days are long gone since 1991, when it was popularly believed, that high taxation will bring great revenue. What the Finance Minister wants, is a broader base of economy to be taxed. (More citizens to come under the tax net). This could mean a lower level of taxation.
The Finance Minister believes that to manufacture quality products and services which are very competitive, taxes also need to be globally competitive.
What you and other citizens understand from this….There could be a lot of tax cuts in Union Budget 2017-18.
The Government had scrapped 500 and 1000 rupee notes, on November 8th 2016. The reason behind this bold move….Break the back of corruption and terrorism in India, fueled by black money, usually hidden in 500 and 1000 rupee notes.
You and other citizens had to suffer, standing in long queues at banks and ATMs, to withdraw money, after the Government placed restrictions, on cash withdrawals. This was widely viewed as a necessary evil, to contain the spread of black money in the economy. What better way to reduce your sufferings and make you happy, than a cut in income tax? The support to the Government will also increase and this is viewed as a good move…Politically.
You, the common man and the middle class of India, expect a income tax cut in the Union Budget 2017-18. You have suffered a lot, because of demonetization. There could be lower salary hikes this year. Threats of job loss….The Finance Minister wants to save you from all these problems. What better way than a cut in taxes?
So how would this be done? The income tax rates could be the same and would not be changed. However, the Government could increase the tax exemption limit, from the current INR 2.5 Lakhs. Expect a sharp increase in the tax exemption limit, from the current INR 2.5 Lakhs.
This would help you and several of our citizens, fall in the lower income tax slabs. If you pay lesser taxes, you save more money and this means more investments. All your high value transactions will be reported by the bank to the tax authorities. Expect to pay tax on your high value transactions. There is no escaping the tax net. The Government can easily cut income taxes, but it could also mean removing some of the tax exemptions, you currently enjoy.
Yes…you want the Government to cut income tax, but most of our citizens, do not pay income tax. Only about 4% of our citizens pay income tax. Lot’s more of our citizens, come under the income tax bracket, but do not care to pay the income tax. The Government would have to force you and other citizens, to pay your income tax dues, through threats of penalties and even a jail term. This increases the tax base. (More number of citizens come under the tax net). The Government can collect more tax revenue and can easily cut income taxes, in Union Budget 2017-18. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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