InvestorQ : What is the loss to the government by increasing the tax-slab from Rs. 2.5 lakhs to Rs. 5 lakhs?
nishi Shah made post

What is the loss to the government by increasing the tax-slab from Rs. 2.5 lakhs to Rs. 5 lakhs?

Answer
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Tanu Shukla answered.
1 year ago


Of the 5.7 crore people who file their tax return, almost 1.5 crores have an income of over Rs 3.5 lakh. If their basic exemption is hiked by Rs 50,000, roughly Rs 75,000 crore will escape the tax net, resulting in a tax loss of Rs 3,750 crore which accounts for 5% of the total tax amount. Add the higher exemption to senior citizens and both measures could jointly cost the exchequer upwards of Rs 4,000 crore.
Looking at these number it is clearly evident that increasing the tax bracket will give a loss to the government. However, as the revenue part of the budget was not clearly announced in this interim budget, we can except that the government might have some sort of plan to balance this effect.