Centre may hike Income Tax exemption limit from Rs 2 lakh to Rs 5 lakh

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Considerable number of people in India who are eligible to be taxed fall into the 10% tax bracket, but most don't pay taxes at all unless there is TDS and even then people exploit all means to evade. Less than 3% of the people in the country pay income taxes. The majority tax payers are either salaried middle class or the rich business folk. Theoretically, the largest share of the tax should be coming from the 10% bracket, but this is not the case in reality. People tend to focus on the the handful who need to pay crores, but forget the crores who need to thousands or lakhs, but don't.
 
Lord Nemesis said:
Considerable number of people in India who are eligible to be taxed fall into the 10% tax bracket, but most don't pay taxes at all unless there is TDS and even then people exploit all means to evade. Less than 3% of the people in the country pay income taxes. The majority tax payers are either salaried middle class or the rich business folk. Theoretically, the largest share of the tax should be coming from the 10% bracket, but this is not the case in reality. People tend to focus on the the handful who need to pay crores, but forget the crores who need to thousands or lakhs, but don't.
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I think indirect taxes need to be increased to counter that.
 
If indirect taxes are increased the small minority paying taxes get a double blow on their income. Its best to increase lowest tax slab to 5 lakh and then increase indirect and direct taxes.
 
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