India’s parliamentary proceedings regarding budget sessions for the year 2020 started on January 31st and is said to continue till March. These sessions have their hands on the tax rates and budget allocations for various sectors in India.
The need for this becomes vital especially when we realize that the crucial decisions taken can affect the make or break for significant growth in the economy.
Some Important News Till Now:
- 99,300 crores for education and 3,000 crores for skill development allotted
- Dividend Distribution Tax proposed to be removed (tax on corporate entities on distributing a certain amount of profits to the investors)
- New income tax slab for the financial year, with visibly reduced rates.
Thus, the last one seems to resonate the most with the middle class of India, for mainly 2 reasons:
- Middle-class Indians generally earn above 2.5 lakhs per year, thus they miss the mark of being exempt from paying taxes (exemption for annual income below 2.5 lakhs)
- But that doesn’t mean they are living a lavish lifestyle either. Sure, this 3% of the population is better off than 40% of it, but the middle-class Indians have their own middle-class struggles by balancing between the demands of their lifestyle and their economic fulfillments to the government.
The Hard-Hitting Truth:
But the reduction of tax rates for people falling under the various categories of the Income Tax slab was not the only thing. Every good news comes at a cost, I guess.
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The choice of this tax slab was only OPTIONAL to the one relating to the previous year’s. The underlying thing is that you could either chose the previous tax slab (with higher rates) and get the benefits of various exemptions from tax (certain income-producing items are exempted from tax), or, you could choose the proposed slab with the condition of having no exemptions. Basically:
Like this, the middle-class Twitterati rose from their slumber to turn such bland information to funny posts and memes. They have truly re-established the idea “There is pain in humour”.
It started off like this…
And went on to be like this…
And voila! They understood that the Ministry of Finance was just having some funz playing with the Income Tax slab, and in return, the hearts of millions of middle-class citizens. Nirmala Sitharaman, the Minister of Finance and Corporate Affairs pulled a viral-YouTube-prank video level joke:
The purpose of the newly revised income rates was to encourage more savings and higher disposable income, which would:
Increase purchasing power → Increase demand for goods and services → Increase production → Increase GDP → Improve the economy
But no one felt that was going to happen.
There are some people who agree with these decisions and some people who may not. Some feel that this newly proposed (and optional) Income Tax slab may change the game, but others feel that it only gives more opportunity to waste time in calculating taxes ( as one has to consider both these methods to choose the lower of the two).
In the end, everyone agrees on one thing:
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Sources: Business Insider, Financial Express, Twitter
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