The Federation of Indian Chambers of Commerce and Industry (FICCI) has called for lifting the income threshold on which highest income rate of 30 per cent is applied under the current income tax structure. In the Pre-Budget Memorandum, industry body FICCI said, "Currently, the peak tax rate of 30 per cent is made applicable over an income of Rs 10 lakh for individual taxpayers. However, the income level on which peak rate is applied in other countries is significantly higher."
Currently, an individual earning up to Rs 2.5 lakh is exempted from paying any income tax. Those earning a higher income have to pay income tax at the rate of 5 per cent on the part of income falling in the Rs 2,50,001-Rs 5,00,000 slab, 20 per cent on that above Rs 5,00,001 up to Rs 10,00,000, and 30 per cent on the income exceeding Rs 10 lakh. In addition to the above mentioned tax rates, income taxpayers have to pay an education and health cess of 4 per cent.
The FICCI in the pre-Budget Memorandum said there is a need for further raising the income level on which the peak tax rate would trigger, to make the same compatible with the international standards.
FICCI recommends the following revised income tax slabs for individual taxpayers:
|Rs 0-3 lakh||Nil|
|Rs 3-5 lakh||5%|
|Rs 5-10 lakh||10%|
|Rs 10-20 lakh||20%|
|Beyond Rs 20 lakh||30%|
The Delhi-based industry body has also called for abolishing surcharge for those who have total income above Rs 50 lakh and Rs 1 crore.
FICCI said, "levy of surcharge on individuals at 10 per cent and 15 per cent having total income above Rs 50 lakhs and Rs. 1 crore respectively should be completely abolished. It is believed that the increased surcharge on certain category of individuals distorts equity and tends to discourage entrepreneurship and incentivises people to relocate to other locations."