Fact-Check: No Official Proposal for Income Tax Exemption up to ₹15 Lakh by the Finance Ministry 

Rumors have been floating in the last few weeks that the Indian Ministry of Finance is contemplating a proposal to exempt people with annual earnings up to ₹15 lakh from income tax.

Such a claim has no truth and has been rejected outright by the government. Let us look into the birth of this rumor, the facts behind India’s income tax system, and the official process of implementing reforms in taxation.

The false claim about exempting from income tax anything up to ₹15 lakh started pouring in on some social networking sites and similar online mediums. Such information, in itself, excites people to a very great degree, while it actually requires verification.

There has been no official statement or notification by the Ministry of Finance supporting this claim. As of now, there is no proposal under consideration to revise income tax slabs to this extent. This kind of misinformation points out how important it is to seek trustworthy and verifiable information, especially on financial policies.

Income Tax Structure of India: A Quick Glance

To understand why such sweeping tax exemption would be improbable without significant policy discussion, it is important to look at how India’s income tax system works:

1. Tax Slabs and Rates

India has a progressive tax system where higher income groups pay a larger percentage of their income as tax. As of the latest financial year, the income tax slabs under the old regime are as follows:

Up to ₹2.5 lakh: Nil

₹2.5 lakh – ₹5 lakh: 5%

₹5 lakh – ₹10 lakh: 20%

Above ₹10 lakh: 30%

2. Under the new tax regime, that came into effect in 2020, taxpayers can choose lower rates but they have to forgo some exemptions and deductions:

Up to ₹2.5 lakh: Nil

₹2.5 lakh – ₹5 lakh: 5%

₹5 lakh – ₹7.5 lakh: 10%

₹7.5 lakh – ₹10 lakh: 15%

₹10 lakh – ₹12.5 lakh: 20%

₹12.5 lakh – ₹15 lakh: 25%

Above ₹15 lakh: 30%

3. Rebate under section 87A

Any person whose income is up to ₹5 lakh gets the complete rebate under Section 87A and is free from tax liability, relieving the low-income tax paying people from this burden.

4. Revenue Implications

Income tax is one of the largest sources of Indian revenues. Dropping taxes by excluding income up to ₹15 lakh would affect the treasury quite significantly. This forms one of the major funding services like healthcare, infrastructural facilities, and educational ones.

Latest Tax Reforms: Strides in the direction of simplification

In recent years, the government has focused on streamlining the tax system and reducing its burden on taxpayers while also balancing the need for revenue collection. Some of the notable initiatives include the following:

1. Introduction of the New Tax Regime (2020)

The new tax regime was an optional one that provided the taxpayer with lower tax rates in lieu of most exemptions and deductions. This way, compliance was made easy and greater flexibility was provided.

2. Faceless Assessment and Appeals

The government made faceless assessment and appeals to increase transparency and minimize corruption. The direct interface between taxpayers and officials decreased.

3. Lower Corporate Tax Rates

In 2019, the government reduced corporate tax rates to attract investment and boost the economy. This was part of a strategy to revitalize the economy.

4. Relief for Startups and Middle Class

Tax benefits and relief have been given over the years to startups and middle-class taxpayers in the form of deductions on housing loans and investments in certain savings schemes.

Official Process to Implement Tax Reforms

Changes in tax structure like full exemption of income up to ₹15 lakh need proper and formal process. Now, let’s see how tax policies are introduced in India:

1. Budget Announcement

Major tax reforms are usually announced during the Union Budget presented by the Finance Minister in Parliament, which ensures transparency and scrutiny by the parliament.

2. Cabinet Approval

Any tax reform proposal must first be approved by the Union Cabinet. This is when the financial and social implications of the proposed changes are discussed.

3. Legislation

Alterations in the income tax rates or exemptions require amendments to the Income Tax Act, 1961. Such amendments are debated and passed in Parliament.

4. Stakeholder Consultation

The government first consults the stakeholders, which include industry representatives, economists, and taxpayers themselves, on the impact such reforms might have before launching major tax reforms.

Negative Effects of False Claims About Tax Reforms

Propagating false claims related to tax reforms has multiple negative impacts:

1. Misinformation

False claims can make taxpayers base financial decisions on false assumptions. For instance, individuals delay tax planning in the belief that there are exemptions which may never be materialized.

2. Erosion of Trust

Repeated spreading of the rumor can harm public confidence toward reliable institutions, for instance, the government and the news media.

3. Market Volatility

Financial markets and investors may react to news about some policy changes. False reports may trigger unnecessary speculation and also instability in the market.

How to Identify or Avoid Fake News

Thus, to avoid being caught by fake news, do the following;

1. Verify With Reliable Sources

Always verify the news through official government websites (like the Ministry of Finance or the Income Tax Department) or reputable news portals before believing and sharing any news.

2. Check for Official Statements

Official announcements or press releases usually accompany policy changes. If that is not available, better to remain skeptical.

3. Avoid Clickbait

Headlines that sound too good to be true, such as a sweeping tax exemption, are often designed to grab attention without factual backing.

4. Fact-Checking Platforms

Use fact-checking platforms like PIB Fact Check or other reputable sources to confirm the authenticity of viral claims.

The claim that the Finance Ministry is considering exempting income tax for individuals earning up to ₹15 lakh is entirely baseless.

There is no proposal or official statement to this effect, and such rumors only serve to mislead and create confusion. India’s income tax system is designed to balance revenue collection with taxpayer relief, and any major reform would involve extensive deliberation and transparency.

Taxpayers should receive information from credible sources while avoiding the spread of rumors. In this way, we can contribute to the more informed and responsible citizenry.