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Interim budget during the last season of Lok Sabha 2019, witnessed one of the populist interim budget. While the Government had eyed to please the commoners, the Finance Ministry played a master stroke, which most of us are not aware.

While many of the analysts are keen on the overall impact on the public savings and investments, while some see it from a negative aspect on the impact it will cause on the Government treasury. But, the most fruitful impact would be as populist as the propaganda of the present Government is the idea implemented by the Finance Ministry for “No Tax” limits. The whole idea of freeing up “No Tax” Limit is the inclusion of the public which are called the “Honest Citizens” of India and to increase the assessee base which has been the biggest worry of the present Government.

A shocking 1.5% of taxpayers (1.90 Crore tax payers) pay Income Tax.

The above line is shocking and painful for a 70 year old independent India. With this, the Government has come out with an idea to tap most of the Non-Tax Paying Citizens to the club of Tax Paying or Tax Complying Citizens.

As per Sec.139(1) which reads as follows:

“139. Return of income.

  • Every person,—
    • being a company or a firm; or
    • being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :”

Thus, the Interim Budget 2019, has not increased the tax slab which is presently fixed for Individuals and HUF at Rs.2.50 lacs. The previous budget as well as current budget has been giving monetary relaxation, but not a relaxation in compliance by means of amendment of Sec.87A only. In other words, if a person earns Rs.4.50 lacs, he would not have to pay Income Tax, but since his total income has exceeded the maximum amount not chargeable to income tax, this person has to file Income Tax Returns, comply with the notices raised and even respond to the questionnaires raised by the Income Tax Department.

Thus, by amending only Sec.87A and allowing monetary relief, instead of amending the Exemption Slab under the First Schedule of respective Finance Acts, the government may have killed multiple birds with one stone, and we wish them good luck for this idea.

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June 2024