After Finance Minister Nirmala Sitharaman tightened income-tax slabs and gave sops to the new income-tax regime to make it more attractive, can income-tax rates come down further? The finance minister has a condition.
In an exclusive interview to Network18 Group Editor Rahul Joshi, she said that the taxpayer base in India need to widen before tax rates can go down further.
She was responding to a question on whether there was scope to slash the rates further, with the highest slab rate going down to 25 percent in future. "Eventually, tax rates must be absolutely low and assessee-friendly. Citizens should not be burdened with taxes. But, after the tax base has widened. Wider the base, the lower the tax,” Sitharaman said.
ALSO READ: New tax regime the future, old tax regime to stay, says FM
In Budget 2023, the finance minister decided to reduce the highest surcharge rate from 37 percent to 25 percent, at par with those earning taxable income of Rs 2-5 crore. The peak tax rate, therefore, has now dropped to 39 percent from 42.74 percent earlier.
Interestingly, it was Sitharaman who had introduced the surcharge rates for income brackets of Rs 2-5 crore (25 percent) and Rs 5 crore (37 percent) and above in Budget 2019, the first full-year Budget for the re-elected Narendra Modi government.
A surcharge is an additional payout to the government, over and above the tax payable. It is calculated as a percentage of the tax applicable to the slab the tax-payer belongs to.
“Collect from those who can pay but collect enough to run all the (government) schemes,” she said, while laying down the path for lowering taxes in future.