Is It Fair To Ask To Pay Tax on Rs2.5 Lakh Income When EWS Quota Limit is Rs8 Lakh? Govt Clarifies…

Moneylife Digital Team 23 December 2022

The Union government, while responding on a query on classification on the economically weaker section (EWS) quota says, the limit of Rs8 lakh for qualifying into the EWS category is a gross income limit and includes income from all sources of all family members.

In a written reply in the Rajya Sabha, Union minister of state for finance, Pankaj Chaudhary, says, "The annual income limit of the family from all sources for the EWS group of general category for availing the benefit of reservation has been fixed at Rs8 lakh by the government. This limit of Rs8 lakh for qualifying into the EWS category is a gross income limit which includes the income from all sources of all family members as opposed to the basic exemption limit under the Income-tax (I-T) Act, which is applicable to the income of a single individual."

Member of Parliament (MP) P Bhattacharya has asked whether "it was appropriate that an individual earning Rs2.5 lakh annually be asked to pay income tax, in view of a government notification that a person or family earning Rs8 lakh annually is considered to be poor."

Under the I-T Act, a person is required to file income tax return (ITR) if her annual income is above Rs2.5 lakh.

"The basic exemption limit as provided under the I-T Act and the threshold income for categorisation in the EWS group are not comparable as the two are computed in a different manner for different purposes," the minister of state added.

No Tax Up To Rs5 Lakh Income of Individuals

The Finance Act, 2019, amended Section 87A of the I-T Act to provide a 100% tax rebate to individuals having total income of up to Rs5 lakh. "Hence under the existing provisions of the Income-tax Act an individual having total income up to Rs5 lakh is not required to pay any income-tax," says Mr Chaudhary.

Reduce tax liability on income up to Rs8 lakh with deductions

Individuals having income higher than Rs5 lakh can avail several incentives and deductions provided under the I-T Act to reduce their total income on which tax is payable.

"Hence even an individual earning an annual income of Rs8 lakh may avail of the available deductions under the Income-tax Act and reduce his total income on which tax is payable," the minister clarifies.

It may be recalled that in January 2019, the Union government implemented the 10% reservation for the economically weaker sections (EWS) from the general category by amending the Constitution.

A five-judge Constitution bench of the Supreme Court in November also upheld the EWS quota saying that it does not violate the basic structure of the Constitution.

You may also want to read:

In Light of SC Judgement on EWS, Petition Seeks Tax Exemption on All Families Earning below Rs8 lakh; Madras HC Issues Notices to Union Govt

Comments

User

rrravi56

3 months ago

Underlying message is clear. Many political parties and several communities DO NOT want one particular community to get any benefits - tomorrow if the government says "this community" will be excluded from the coverage of EWS quota, all opposition will die down !!