With the days of Budget 2019 announcement coming closer the expectations are being talked about loud!! In our second series of blog, let’s talk about the slab rates. We previously focused on drawing pictures of predicted slab limits but in today’s blog, we will focus upon the decrease in slab tax rates as foreseen form the Interim Budget to be soon presented by the NDA government this February.
The existing slab tax rates as specified under the Income Tax Act 1961 for the Financial Year 2018-19 are likely to be reduced by 5%
I.e the current highest slab tax rate of 30% is expected to be reduced to 25%. This will help in lowering down the tax burden to those earning above Rs 10 lakhs annually. In addition to this lowering down of this slab, it will be a welcome step in the harmonization of tax rates. As it will bring Direct taxes near to rates of Indirect taxes and also to the specified class of corporate tax rates.
In addition to the above complete abolishing of 30% slab might not be proposed but it is expected to at least increase the slab limit to which it currently applies. Which means, instead of current Rs 10 Lakh 30% tax rate might be introduced to levy upon income exceeding Rs 20 Lakhs.
For those, whose income range between Rs 5 lakhs to Rs 10 lakhs it is foreseen that the tax rate might decrease to 15% form the existing applicable tax rate of 20%. This will boost investment and spending capacities of a number of working professionals nowadays.
In the Indian Interim Budgets, it has normally been witnessed that no departing government announces big tax relief of change in tax rates. But, as the previous budgets of the Modi government has already set to break a number of records. Like merging of Finance Budget and Railway budget, shifting the budget announcement date by a month etc. We all can expect for major tax reliefs to be announced soon.