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Personal income tax slabs revised; new tax regime now default

Tax. (IANS Infographics)

The FM also allowed a Rs 50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments…reports Asian Lite News

While the Narendra Modi-led Central government presented Wednesday its last full-fledged Budget ahead of the 2024 general elections, Union Finance Minister Nirmala Sitharaman announced that the new tax regime will now be the default tax regime.

The FM also announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime. “Currently, those with an income of Rs 5 lakh do not pay any income tax and I propose to increase the rebate limit to Rs 7 lakh in the new tax regime,” the Finance Minister said while presenting the Budget.

While a five per cent tax will be levied on total income between Rs 3 lakh and Rs 6 lakh, 10 per cent will be levied on Rs 6 lakh to Rs 9 lakh, 15 per cent on Rs 9 lakh to Rs 12 lakh, 20 per cent on Rs 12 lakh to Rs 15 lakh and 30 per cent on Rs 15 lakh and above.

Here are the revised tax slabs under new tax regime

  • Income of Rs 0-3 lakh is nil.
  • Income above Rs 3 lakh and up to Rs 6 lakh to be taxed at 5% under new regime.
  • Income of above Rs 6 lakh and up to Rs 9 lakh to be taxed at 10% under new regime.
  • Income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20% under new regime.
  • Income above Rs 15 lakh to be taxed at Rs 30%.

The government, meanwhile, also proposed to reduce highest surcharge rate from 37 per cent to 25 per cent in new tax regime.

While explaining the new tax regime, Finance Minister Nirmala Sitharaman also spoke about the losses the Centre would undertake for facilitating it. “India will lose Rs 35,000 crore of net tax revenue to provide relief to the middle-income group. “Revenue of about Rs 38,000 crore — Rs. 37,000 crore in direct taxes and Rs 1,000 crore in indirect taxes — will be forgone while revenue of about Rs 3,000 crore will be additionally mobilized. Thus, the total revenue forgone is about Rs 35,000 crore annually,” she said.

The FM also allowed a Rs 50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments.

It may be recalled that the Finance Minister did not announce any change in income tax slabs in the last Budget.

Meanwhile, the FM had, last month, defended the new income tax regime saying it had not reversed any gains from the old regime’s simplicity. “If indeed there were gains of simplicity (from the old income tax regime), I want to assure they have not been reversed,” Sitharaman said in New Delhi. “For every tax assessee, it has 7, 8, 9, 10 exemptions. And with all that exemptions, the rate 10, 20, 30 per cent continues. It continues even today. We have not removed it. What we have done in the name of simplicity and to avoid harassment… removing harassment was what was aimed at when we brought in faceless tax assessment,” she added.

The government in Budget 2020-21 brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail specified exemptions and deductions, like house rent allowance (HRA), interest on home loan, investments made under Section 80C, 80D and 80CCD. Under this, total income up to Rs 2.5 lakh was tax exempt.

Currently, a 5 per cent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh.

The scheme, however, has not gained traction as in several cases it resulted in higher tax burden.

“In simple words, the enhancement of this limit to seven lakh rupees means that the person whose income is less than Rs.7 lakhs need not invest anything to claim exemptions and the entire income would be tax-free irrespective of the quantum of investment made by such an individual. This will result in giving more consumption power to the middle-class income group as they could spend the entire amount of income without bothering too much about investment schemes to take the benefit of exemptions” explained Abhishek A Rastogi, Founder of Rastogi Chambers

The income tax changes rolled out to cost the govt revenue of about ₹38,000 crore. As a result of these proposals, revenue of about ₹38,000 crore – ₹37,000 crore in direct taxes and ₹1,000 crore in indirect taxes – will be forgone while revenue of about ₹3,000 crore will be additionally mobilized. Thus, the total revenue forgone is about ₹35,000 crore annually

Proposal for the salaried class and the pensioners including family pensioners, for whom proposed to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakh or more will thus stand to benefit by ₹52,500: FM

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-Top News London News UK News

Sunak vows 20% cut to income tax  

Sunak said the plan would mark the biggest income tax cut since the time of Margaret Thatcher…reports Asian Lite News

Rishi Sunak, trailing in the race to become Britain’s next prime minister, has vowed to slash the basic rate of income tax by 20 per cent by 2029 in a potentially make-or-break throw of the dice by the former finance minister.

Sunak, once seen as the favourite to replace Boris Johnson when he helped to steer the economy through the ravages of the Covid-19 pandemic, has struggled against his rival, Foreign Secretary Liz Truss, who has pledged immediate tax cuts.

The bruising race between Sunak and Truss to become Britain’s next prime minister stepped up a gear on Monday (Aug 1) with the mailing out of ballots to Conservative party members.

Sunak said he remained focused on tackling inflation but once that was achieved he would follow through on an already-announced plan to take 1 pence (S$16.90) off income tax in 2024, and then take a further 3 pence off by the end of the next parliament, likely around 2029.

The two pledges would take income tax from 20p to 16p.

Sunak said the plan would mark the biggest income tax cut since the time of Margaret Thatcher.

“It is a radical vision but it is also a realistic one,” he said in a statement on Sunday (July 31).

Britain’s hunt for a new prime minister was triggered on July 7 when Johnson was forced to announce his resignation following months of scandal. Conservative lawmakers have whittled a field of candidates down to Truss and Sunak, with an announcement of the decision by party members due on Sept. 5.

With inflation surging to a 40-year high of 9.4 per cent and growth stalling, the economy dominated early stages of the contest.

Sunak, who steered the UK economy through the pandemic, said Truss’ plans were “fantasy economics” that would fuel inflation and heap further strain on public finances struggling to recover from the pandemic.

Sunak said each penny cut from the rate of income tax would cost around 6 billion pounds (S$10.1 billion) a year, a figure that he said would still allow Britain’s debt-to-GDP ratio to fall, if the economy grows in line with official forecasts.

Truss has argued that tax cuts are needed now to give the economy a shot in the arm. A recent poll by YouGov showed Truss held a 24-point lead over Sunak among Conservative Party members.

Trailing in polls with the all-important party members, Sunak last week performed a significant U-turn by announcing a plan to scrap VAT on energy bills.

He also promised grassroot Tories over the weekend that he would stop “woke nonsense” and “end the brainwashing” if he becomes prime minister, although added he has “zero interest in fighting a so-called culture war”.

The 42-year-old also unveiled plans to revive the country’s ailing town centres.

“I want to slash the number of empty shops by 2025 and make sure that they are turned into thriving local assets,” he said.

“I will also crack down on anti-social behaviour, graffiti and littering – through extended police powers and increased fines.”

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-Top News World News

1% Indians own 20% of national income

The middle class is also relatively poor, with an average wealth of Rs 7,23,930. At the same time, the top 10% of the population owns around Rs 6,354,070, while it’s a massive Rs 32,449,360 for the top 1%, reports Asian Lite News

The gap between the haves and have-nots in India widened further in 2021, according to the World Inequality Report 2022, released on Tuesday.

Authored by Lucas Chancel, co-director of the World Inequality Lab, and coordinated by famed French economist Thomas Piketty, the report notes that the top 1% of India’s population owns more than one-fifth of the total national income and the top 10% owns 57% .

In contrast, the bottom half owns just 13%.

“India stands out as a poor and very unequal country, with affluent elite,” said the report by the World Inequality Lab, which does work through evidence-based research on inequality worldwide.

According to the report, the average household wealth in India is Rs 9,83,010, with the bottom 50% owning almost nothing as their average wealth is a paltry Rs 66,280.

The middle class is also relatively poor, with an average wealth of Rs 7,23,930. At the same time, the top 10% of the population owns around Rs 6,354,070, while it’s a massive Rs 32,449,360 for the top 1%.

The report notes that India’s liberalisation policies have led to one of the most extreme increases in income and wealth inequality observed in the world.

While the top one per cent has largely benefited from economic reforms, growth among low and middle-income groups has been relatively slow and poverty persists.

Gender inequalities are also very high in the country. The female labour income share is equal to 18%. This is significantly lower than the average in Asia, excluding China, at 21%.

Billionaires’ share of global wealth soars

The share of global wealth of the world’s richest people soared at a record pace during the Covid pandemic, a report on inequality showed Tuesday. Since 1995, the slice held by billionaires has risen from one percent to three percent, according to the World Inequality Report.

“This increase was exacerbated during the Covid pandemic. In fact, 2020 marked the steepest increase in global billionaires’ share of wealth on record,” the document said. The club of the richest one percent has taken more than a third of all additional wealth accumulated since 1995, while the bottom 50 percent captured just two percent.

“After more than 18 months of Covid-19, the world is even more polarised,” Lucas Chancel, co-director of the World Inequality Lab at the Paris School of Economics, said. “While the wealth of billionaires rose by more than 3.6 trillion euros ($4 trillion), 100 million more people joined the ranks of extreme poverty,” said Chancel, noting that extreme poverty had been previously falling for 25 years.

A real-time ranking by Forbes magazine shows that the top 10 richest people each have a net worth exceeding $100 billion, with Tesla boss Elon Musk on top with around $265 billion.

Only one of the men is not American – LVMH luxury group chief Bernard Arnault – and all but two are tech industry leaders whose fortunes have been turbocharged by soaring company share prices.

Exacerbated inequalities

According to the report, the world’s 52 richest individuals have seen the value of their wealth grow by 9.2 percent per year for the past 25 years, well above less wealthy social groups. Women’s share of total global income from work was less than 35 percent, up from near 30 percent in 1990 but short of parity with men.

Europe was the world’s most equal region, with the richest 10 percent taking 36 percent of the income share, whereas the Middle East and North Africa was the most unequal as the wealthiest 10 percent of society took 58 percent of income.

Chancel, the study’s lead author, said state intervention was crucial in the fight against poverty but those wealthier nations were able to act more during the coronavirus pandemic. Rich countries introduced measures such as furlough and increased social security payments during the crisis to prop up income levels and save jobs, which states with fewer resources did not replicate.

It added that today’s taxes excessively target property and should instead include all forms of wealth, particularly financial assets, which make up the core of modern fortunes.

The authors also recommended the creation of an international financial register to allow authorities to monitor taxpayers’ assets and capital income and reduce tax evasion.

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Organic cluster farming in UP increases farmer’ income

In view of the success of this three-year project in the first year itself, the state government is gearing up to start the second phase of this project soon…reports Asian Lite News.

Organic cluster farming on the banks of the Ganga river in 11 districts in Uttar Pradesh have not only reduced the cost of agriculture, but also increased the agricultural production and income of the farmers but also cleaned the environment.

The Yogi Adityanath government has launched a concerted campaign on this regard in the 11 districts of the state. Along with the objective of cleaning the river, organic farming is also being done on both the banks of River Ganga in these 11 districts under the Clean Ganga Mission.

According to a state government spokesman, under this project of the government, 21,142 farmers of the 11 districts, located along Ganga River from Bijnore to Ballia, have formed 700 organic clusters in an area of 14,000 hectares.

The farmers included in these clusters have grown various crops through organic method in the Kharif 2020 and Rabi 2020-21 seasons.

Kamta, a farmer from Ballia, said that he received all assistance from the government in growing, reaping and packing the organic products and got good price of their produce.

These products were displayed in the stalls of fairs, exhibitions and seminars organized at various occasions. Farmers have so far sold organic products worth Rs 2.76 crore from this project.

In view of the success of this three-year project in the first year itself, the state government is gearing up to start the second phase of this project soon.

Of the total project cost of Rs 71.40 crore, an amount of Rs 21.05 crore has been spent.

It is noteworthy that the state government, in order to double the income of the farmers, has created many facilities which included impetus to organic farming, switch to profitable crops and diversification in agricultural methods.

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