Finance Minister Arun Jaitley halved the rate of income tax in the annual budget
Finance Minister Arun Jaitley today halved the rate of income tax in his budget, promising to increase spending on the poor. Mr Jaitley also strongly defended the notes ban, assuring that its impact on the economy would not spill over to the next year.
"The Finance Minister has presented an
uttam budget, devoted to strengthening the hands of the poor," Prime Minister Narendra Modi said on the budget.
Income tax for individuals who earn between 2.5 to 5 lakh and corporate tax for companies with an annual turnover of up to 50 crores has been reduced.
After rebates, there will be zero tax liability for people with an income of 3 lakhs. All other categories will also get uniform benefit of Rs. 12,500.
A 10 per cent surcharge has been imposed on those earning 50 lakhs to 1 crore. A 15 per cent surcharge on those earning more than one crore will stay.
"We are largely a tax non-compliant society. When too many people evade tax, the burden falls on those who are honest," Mr Jaitley said.
He defended demonetisation, calling it a bold measure against decades of tax evasion, which would have an "epoch-making" impact on the lives of people.
The government relaxed its fiscal deficit target to 3.2 percent for the financial year 2017-18, citing the increase in government spending, but said it would be back on track for a three-percent deficit the following financial year.
The finance minister also laid out measures to increase tax revenues after the notes ban announced in November.
Mr Jaitley promised to increase government funding for farmers, who have been hard hit by the currency ban, including by granting them a 60-day waiver on interest for agricultural loans.
He also promised more affordable housing for the poor.
"My overall approach while preparing this budget has been to spend more in rural areas, poverty alleviation through fiscal prudence," Mr Jaitley said.