homepersonal finance NewsIncome tax threshold limit of Rs 2.5 lakh needs to be re looked at, says Dhruva Advisors’ Dinesh Kanabar
Income tax threshold limit of Rs 2.5 lakh needs to be re-looked at, says Dhruva Advisors’ Dinesh Kanabar
Speaking to CNBC-TV18, Dinesh Kanabar, CEO of Dhruva Advisors said any reduction in tax rates would result in higher income in the hands of the people, which would in turn lead to increased spending and help kickstart the economy.
The Union Budget is just five days away, this is the last full budget before the general election in 2024. The Finance Minister is likely to provide income tax relief to the middle class. Those earning between Rs 8 and 10 lakhs could see a reduction of tax rate to 10 percent from the current 20 percent.
Speaking to CNBC-TV18, Dinesh Kanabar, CEO of Dhruva Advisors said any reduction in tax rates would result in higher income in the hands of the people, which would in turn lead to increased spending and help kickstart the economy.
He said, “Any reduction in the rate of tax is always something which leaves higher income in the hands of the people. And when you have that higher disposable income, it obviously benefits the economy back because a lot of the money, particularly in the lower income category, and the middle-class people really goes back into spending and therefore really gets back to kick starting the economy.”
Kanabar also highlighted the need to re-look at the income tax threshold limit of Rs 2.5 lakh. He emphasized the importance of ensuring that more money is left in people's hands, and suggested that enhancing the tax threshold limit would be a helpful step in this regard.
He added, "While we have a highest tax rate of 30 percent but we have surcharge, and that surcharge effectively takes the rate of tax to 42 percent. Now that sort of making things slightly unconscionable, and the government needs to relook. So overall, I would agree with you that there is a need to relook at the entire tax structure. For individuals, the corporate income tax has been overhauled very well, and there is a need to really overhaul the tax rate applicable to Individuals."
Also, the 30 percent tax rate for those earning more than Rs 10 lakh could be reduced to 25 percent. Other relief measures could include increasing the exemption limit under 80-C from Rs 1.5 to 2 lakh, increasing exemption on housing loans and increasing tax benefits under 80D.
Job creation could be the other big theme in the Budget with a scheme to increase urban employment and a scheme to support gig workers with loans.
Gopal Agarwal, the Spokesperson of the Bharatiya Janata Party (BJP), said that direct taxes are not a major concern for the government at this time.
Speaking to CNBC-TV18 on the topic of tax slabs, Agarwal acknowledged that increasing the threshold limit may cause more people to leave the taxation bracket.
Agarwal stated that the government is more focused on economic growth and development, and that the upcoming Budget 2023 could provide an impetus for these goals. He also emphasized that the government has understood that economic development does not only have to do with tax slabs.
(Edited by : Anushka Sharma)
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