Jaitley hints at further hike in tax exemption limit
22 November 2014
Finance minister Arun Jaitley today said he would encourage more money being put in the pockets of tax payers that will lead to spending and collection of more indirect taxes and that he did not favour burdening the salaried and middle-class with more taxes.
In fact, he would like the tax net to be cast wider, he said.
"This widening of the tax base. What does it mean? I pay the same indirect tax as my attendant. Our volume of consumption may be different. So everybody is paying indirect taxes.
"And literally almost half your taxes are indirect taxes today. He pays excise, he pays customs duty, he pays service tax. Now as far as income tax is concerned, to bring those who evade tax is widening the tax net, I am all for it," the minister said in an interaction with PTI journalists.
Jaitley who had increased the tax exemption limit from Rs2 lakh to Rs2.5 lakh in his last budget, will be presenting his first full budget in February.
"After all what are we talking about Rs2.5 lakh today means, taking all the deductions which we have given, somebody up to Rs3.5-4 lakh does not have to pay tax. So we have reached the situation broadly.
"One earning Rs35,000-40,000 per month, if the person puts some money for savings, won't have to pay tax. But people falling in this bracket say that they don't save anything with salary of Rs35,000-40,000 (under) the present cost of living, the transport cost, the fees of children and so on," Jaitley said.
Therefore, the minister said, he was against reducing the exemptions to widen the tax net. "Then that's not my approach," he added.
"So I am quite willing, if I had my way and I had more money in my pocket, I would like to expand. But today the revenue position is challenging. Last time I gave several concessions, which were actually beyond my means.
"But it's all fine to bring those who evade tax under the tax net. But to bring this vulnerable section into the tax net, that can't be the policy today. In fact if you put additional money in their pockets and allow them to spend, then I collect correspondingly more indirect taxes so I will rather encourage more economic activity."
On black money within the country, he said: "It is huge quantity and more easily traceable. Because you go to real estate, you go to land, you go to mining, you go to jewellery, you go to luxury goods, you will find the domestic (black money). You go to educational institutions, you will find it there. Therefore to trace out the buyers and the recipients is also easy."