Business | Economy
Minimum taxable income raised to $3,754
India's government proposed raising the minimum taxable income by 36 per cent as it collects more taxes with fewer people avoiding payment in a growing economy.
- Bloomberg
- Published: 01:04 March 1, 2008
New Delhi: India's government proposed raising the minimum taxable income by 36 per cent as it collects more taxes with fewer people avoiding payment in a growing economy.
India plans to raise the minimum taxable income to Rs150,000 ($3,754) from Rs110,000, Finance Minister Palaniappan Chidambaram said.
India's tax collection increased to 12.5 per cent of the country's gross domestic product this year from 9.2 per cent a few years earlier, Chidambaram said.
The country is the world's second-fastest growing major economy after China.
"High growth rates have helped," Chidambaram said. "Changes and attitudes have also helped" with tax collection.
The change would mean workers in India will only pay taxes if their salaries exceed Rs150,000. For those earning between Rs150,000 and Rs300,000, the amount will be taxed at 10 per cent, and the rate rises to 20 per cent for earnings of Rs300,001 to Rs500,000.
On income exceeding Rs500,000, the tax rate is 30 per cent, Chidambaram said.
The tax benefit probably won't lead to a significant increase in spending, said Sudhir Kapadia, head of taxes at KPMG, an accounting and consulting company.
"The minister himself has said it would lead to a gain of about Rs4,000 and that's nothing spectacular,'' Kapadia said. "This is not going to have any dramatic impact."
Chidambaram left tax rates for other categories unchanged.
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