NITI Aayog bats for changing 10%I-T slab

National InstitutionforTransforming India (NITI)Aayog is in favour of keeping the threshold for the income tax(I-T) exemption intactatRs. 2.5 lakh.Instead,they want to extend the tax(10percent)on theRs.5lakh slab toRs.7 lakh.Officials said that the Aayog favours expansion of the tax base to enable more people too paytaxes,ratherthan expandingtheexemptionlimits.

Finance Minister Arun Jaitley had raised the threshold for income tax exemption to Rs.2.5lakh from Rs.2lakh in his very first Budget for2014-15.

At present, there are three slabs — 10 per cent for annual income between ~2.5 lakh and ~5 lakh, 20 per cent on annual income from ~5 lakh to ~10 lakh, and 30 per cent on income above ~10 lakh.
The Aayog also advocated job creation being the central theme of the Budget.

In its appraisal of the Twelfth Five-Year Plan (201213 and 2016-17) — the last such exercise before Plans winds up — the Aayog also wanted the government to curb discretionary powers of the tax officials and a clear regulation on it. The appraisal is being done only two and a half months before the Plans ends.

It said there was need to clearly spell out tax laws so that future investors can assess their liabilities with reasonable certainty. “China has firms such as Foxconn that employs 1.3 million workers and pays wages averaging $3 per hour… India cannot afford to miss out on good jobs that such firms promise,” the document said.

The Central Board of Direct Taxes, in fact, has come out with advance pricing agreements, mutual agreement procedures and safe harbour rules to settle transfer pricing disputes. The appraisal praised the government for its commitment to initiate no new inquiries into retrospective tax liability in the wake of disputes relating to Vodafone.

That apart, the appraisal also favored simplification of regulatory-cum-administrative procedures on what has come to be popularly referred to as ease of doing business.

“The rules governing construction permits, getting electricity, registering property, paying taxes, trading across borders can be cumbersome and thus deter many potential investors from entering business in the first phase,” the appraisal said.

Business Standard New Delhi,12th January 2017