Only 2% of crorepatis defined as 'professionals' declared an annual income of Rs 1 crore in income-tax returns for the assessment year AY 2019-20, the government said on Tuesday.
The category of professionals comprise doctors, lawyers, tax consultants, etc who do not get salary on which tax can be deducted at source.
Minister of State for Finance Anurag Singh Thakur said in Rajya Sabha that the number of professionals who earn above Rs 1 crore has remained sluggish at just around 2,000 between AY 2015-16 and AY 2019-20.
He further added that during the same period, the number of all groups of individuals who declared income above Rs 1 crore leapt by 78% to 1.05 lakh.
The income-tax law also facilitates presumptive taxation for professionals who earn up to Rs 50 lakh per annum wherein they can pay tax on only half of their annual gross income.
During her Budget 2020 speech, Finance Minister Nirmala Sitharaman had announced "a new and simplified personal tax regime" with revised income tax slabs and tax rates. She said those earning Rs 5-7.5 lakh would now pay just 10 per cent income tax, while those earning up to Rs 5 lakh in a year will pay no tax. Income tax rates will be significantly reduced for those who forego deductions and exemptions, Sitharaman said.
For income between Rs 7.5 lakh and Rs 10 lakh per annum, the income tax rate has been reduced to 15 per cent from the current 20 per cent.
For income between Rs 10 lakh to Rs 12.5 lakh per annum, income tax has been reduced to 20 per cent from the current 30 per cent.
For those earning between Rs 12.5 lakh to Rs 15 lakh, income tax of 25 per cent will be imposed. A person earning Rs 15 lakh per anum and not availing any deductions will pay Rs 1.95 lakh tax in place of Rs 2.73 lakh, the FM said. The tax cuts will cost the government Rs 40,000 crore per annum.
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