Middle income group hails tax slab revision

New slabs expected to bring more money into the hands of taxpayers

Biju Puthuvally had been glued to the television right from the time when Finance Minister Nirmala Sitharaman began presenting the Budget on Saturday morning.

An IT professional, he was eagerly waiting for her speech on personal income tax slabs. She did not disappoint him as she went on to announce the reduced tax rates. Biju was among the many middle-class taxpayers in the city who had expected a cut in personal income tax rates.

“The new slabs are welcome as they will bring more money into the hands of the individual. However, there will be confusion on the option being given to the taxpayer on whether to switch to the new tax regime or stick with the old one. It would have been good if the Minister had enabled tax cuts without foregoing exemptions and deductions,” he said.

Mr. Puthuvally was referring to her proposal that the new tax regime would be optional, and taxpayers would be given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without exemptions.

Insurance cover

Dr. Premila Harimohan, a specialist in child development, was all praise for the Budget proposal to raise the limit of insurance cover in case of bank failure on deposits to ₹5 lakh from ₹1 lakh. “This will be beneficial, especially for the elderly as a safe cover for their deposits. But I am anxious about the recommendation on selling a part of the Government holding in Life Insurance Corporation through an initial public offering,” she said.

Geevarghese Oommen, a senior manager with an automobile company, said a middle-income taxpayer could not have asked for more going by the considerable cuts in personal income tax slabs. “The tax reduction will be of immense help for people having an annual income of ₹5 lakh to ₹7.5 lakh as they will now have to pay a reduced tax of 10%, and those in the income range between ₹7.5 lakh and ₹10 lakh need to pay only 15% from the earlier 20%,” he added. On the option given to taxpayers to choose between the existing income tax regime and a new one, Sreekumar Menon, a chartered accountant, said individuals should make their own calculations. “If you are a young person and not really worried about a life insurance policy, you need not take a life insurance to meet the ₹1.5-lakh exemption limit and can opt for the new regime,” he said.

B. Ajith Kumar, marketing manger, Traco Cables, said the reduction in income tax rates would help the salaried class to increase their spending. “The existing tax slabs are a huge burden. The new slabs will improve the ease of living of the salaried class,” he observed.

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Printable version | Feb 22, 2020 11:57:49 AM | https://www.thehindu.com/news/cities/Kochi/middle-income-group-hails-tax-slab-revision/article30716970.ece

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