Budget 2018: The middle class has actually received a relief of only ₹290

Govt announced the provision of standard deduction of ₹40,000 in transport & medical expenses in Budget 2018. Now, the income tax will be estimated after deducting ₹40, 000 from the annual earning

Photo courtesy: Twitter
Photo courtesy: Twitter
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NH Web Desk

Finance Minister Arun Jaitley made tall claims of keeping in mind the taxpayers’ interests in Budget 2018. But the truth is, the last budget presented by the Modi government has given a major blow to the salaried class of the country. The government has not changed any tax slabs and not given any concessions. But in the name of the standard deduction, only a relief of ₹40,000 has been granted in transport and medical expenses. Jaitley claimed that with this concession the government will lose ₹8,000 crores

But the government has taken away transport, medical and other allowance. Up till now, medical bill up to ₹15,000 was tax-free, as transport allowance, the employees received a concession of ₹19,200. So, if these two allowances are not given, the amount of tax-free income will only increase by ₹5,800. That means, now the tax-free income will be ₹2,55,800 instead of ₹2.5 lakh.

On one hand, the finance minister put the burden of ₹8,000 crores on the treasury in form of the standard deduction and on the other, has increased 1% cess thereby collecting ₹11,000 from the public. It is clear that the taxpaying community will actually be burdened with more tax and the talk of ‘relief’ is hollow

The people who were paying 5% taxes, will only get a concession of ₹290 more. People who were paying 20% tax will get a concession of ₹1,160 more and people who were paying 30% taxes will save only ₹1,740 more.

But the important thing to note here is that the 3% cess on income tax has not been added to this saving estimate. In the new budget, this cess has been increased to 4%. The income tax may subsequently increase and thus people will not be benefited by whatever little raise in concession they will get in income tax.

So, on one hand, the finance minister put the burden of ₹8,000 crores on the treasury in form of the standard deduction and on the other, has increased 1% cess thereby collecting ₹11,000 from the public. It is clear that the taxpaying community will be actually be burdened with more tax and the talk of ‘relief’ is hollow.

The standard deduction is the amount which is deducted from the annual earnings before calculating the income tax. The provision of standard deduction which the government has made in budget 2018 was removed in the budget of 2005-06 by the then finance minister P Chidambaram.

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Published: 05 Feb 2018, 5:33 PM