Arun Jaitley
Union Finance Minister Arun Jaitley.Reuters File

In the 2015-16 Union Budget to be presented next February, Finance Minister Arun Jaitley has decided to target tax evaders instead of burdening the vulnerable middle-class.

Jaitley is neither willing to burden the salaried, middle-class strata with higher taxes, nor is he willing to withdraw tax concessions on home loans and savings such as public provident fund deposits to widen the tax base.

"...it's all fine to bring those who evade tax under the tax net. But to bring this vulnerable section (salaried, middle-class) into the tax net, that can't be the policy today," The Times of India quoted Jaitley as saying.

The minister is in favour of increasing the exemption limit for the section of the society he considers vulnerable. He said if he had enough money he would raise the exemption limit to help these people save more.

He explained that if the people are able to save additional money and are allowed to spend it, the exchequer can collect more indirect taxes, thereby encouraging more economic activity in the country.

"One earning Rs 35,000-40,000 per 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.

"This 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. And 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 added.

Jaitley is apparently looking for a people-friendly budget this fiscal year by keeping the middle class free of tax burden at a crucial time when the cost of living is at a rise in the country.

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