New Delhi, Feb. 1 (IANS): Finance Minister Arun Jaitley on Thursday did not provide any relief in the income tax rates for 2018-19, but increased the cess levied on it by 1 per cent to raise Rs 11,000 crore.
“The government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years,” Jaitley said in his Budget speech.
“Therefore, I do not propose to make any further change in the structure of the income tax rates for individuals.”
In the Budget 2017-18, Jaitley had reduced the income tax rate to 5 per cent from 10 per cent under the income slab from Rs 2.5 lakh per annum to Rs 5 lakh per annum.
However, Jaitley proposed to hike the cess on personal income tax by one per cent.
“... at present there is a three per cent cess on personal income tax and corporation tax consisting of two per cent cess for primary education and one per cent cess for secondary and higher education. In order to take care of the needs of education and health of BPL and rural families, I have announced programs...,” Jaitley said.
“To fund this, I propose to increase the cess by one per cent. The existing three per cent education cess will be replaced by a four per cent health and education cess to be levied on the tax payable. This will enable us to collect an estimated additional amount of `11,000 crore.”
In addition, Jaitley proposed to “allow a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses”.
“Apart from reducing paper work and compliance, this will help middle class employees even more in terms of reduction in their tax liability. This decision to allow standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses. The revenue cost of this decision is approximately Rs 8,000 crore,” Jaitley said.
“The total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crore.”
The current tax-free limit for medical expense reimbursement is set at 15,000 per annum and transport allowance exemption of Rs 1,600 per month.
