Jaitley against burdening salaried, middle class

He said he would encourage more money being put in the pockets of tax payers that will lead to spending

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Finance Minister Arun Jaitley on Saturday said he does not favour burdening the salaried and middle class with more taxes but would go after the evaders in widening the net. He would encourage more money being put in the pockets of tax payers that will lead to spending and collection of more indirect taxes.

“This is widening of the tax base. What does it mean? ...I pay the same indirect tax as my attendant. Our volume of consumption may be different. So, everybody is paying indirect taxes,” he said.

During an interaction with PTI journalists, he said, “Literally almost half your taxes are indirect taxes today. He pays excise, he pays customs duty, he pays service tax. Now, as far as income tax is concerned, to bring those who evade tax is widening the tax net, I am all for it."

He was replying to a question on whether his Budget would look at widening the tax base to maximise revenue. Jaitley, who will be presenting his first full fledged Budget in February, said in his last Budget he had increased the tax exemption limit from Rs 2 lakh to Rs 2.5 lakh and would even raise it further if he had more money.

“After all what are we talking about Rs 2.5 lakh today means, taking all the deductions which we have given, somebody up to Rs 3.5-4 lakh does not have to pay tax. So we have reached the situation broadly. “One earning Rs 35,000-40,000 a month, if the person puts some money for savings, (he) won't have to pay tax. But people falling in this bracket say that they don't save anything with salary of Rs 35,000-40,000 (with) the present cost of living, the transport cost, the fees of children and so on," Jaitley said.

Therefore, the Minister said, he was against reducing the exemptions to widen the tax net. "Then that's not my approach," he added.

"So I am quite willing, if I had my way and I had more money in my pocket, I would like to expand. But today the revenue position is challenging. Last time I gave several concessions, which were actually beyond my means. But it's all fine to bring those who evade tax under the tax net. But to bring this vulnerable section into the tax net, that can't be the policy today. In fact if you put additional money in their pockets and allow them to spend, then I collect correspondingly more indirect taxes so I will rather encourage more economic activity."

On black money within the country, he said: "It is a huge quantity and more easily traceable. Because you go to real estate, you go to land, you go to mining, you go to jewellery, you go to luxury goods, you will find the domestic (black money). You go to educational institutions, you will find it there. Therefore, to trace out the buyers and the recipients is also easy."