As per sources, the IT department may not make any room for personal tax relief for this fiscal year 2016-17. It is because there is a deficiency in the fiscal space. Senior officials made such statements foretelling the department plans for this FY.
Currently, serious discussions are under the works about the upcoming budget. They will reveal this February. And the concerned departments are working on the numbers right now. However, the government’s hands seem tight due to lack of fiscal room which is why their plans are far from being libertarian. Hence, it is highly unlikely that there will be any major concessions on the personal income tax department but there may some loosening for taxpayers after all. Such were the comments from a senior taxman who did not wish to reveal his name.
The similar challenges remain to be crippling the government in the current fiscal year as it did for the previous one. So, FY 2016-17also bears low fiscal room due to a number of reasons. The first being the implications of the 7th Pay Commission rollout recommendations. The Pay commission as discussed previously had suggested that pay, as well as allowance, be hiked to 23.6 percent greater and pension should be raised to 24 percent. Also, the regulation of one-rank-one-pension for paramilitary and government employees has further added to this narrowing of fiscal room.
Govt Tax relief changes
As per the finance ministry calculations, the above-mentioned changes will cost the government around INR 1 Lakh crore in this fiscal year of 2016-17. But these proposals are under the final stages of examination and they will implement soon in this very FY. On a positive, the low prices of global crude oil have somewhat cushioned the blow. But there are chances of it increasing in the upcoming year which requires to the government to be prepared. But the present low prices have arranged for some breathing room.
While the economy shows signs of reviving but the expectations from public sector investments are greater than that of private sectors, as they have not yet faired as good as were expected to do. As per the midyear economic review which was presented as a half-yearly report card did offer ample financial and economic policies to jumpstart public sector investments. The government still maintains its strong position to maintain the fiscal deficit target as decided previously. So the budget this year is highly likely to be a tight-rope walk for the nation.
Contrary to the previous fiscal year’s budget of 2015-16, which witnessed the Finance Minister Arun Jaitley to have extended numerous relaxations and benefits for the middle-class taxpayers including greater exemptions associated with health insurance premiums within INR 15,000 to INR 25,000. They have raised upper limit to INR 30,000 for senior citizens in relation to the current limit of INR 20,000. With the development of the economy, individual tax-payers would have something to look forward to in terms of tax-gains.
Tax relief for corporate houses
The previous saw the reduction in corporate tax rate from 30 percent to 25 percent, for the upcoming four years in order to boost the economy and to amplify jobs. He also proposed to streamline the tax procedure by rationalizing it and removing various exemptions from the corporate tax system. This forms to be the main reason behind tax disputes.