Exempt all persons with Annual Income of less than Rs. 8 Lakh from Income Tax: HC

Exempt all persons with Annual Income of less than Rs. 8 Lakh from Income Tax: HC

Reetu | Nov 23, 2022 |

Exempt all persons with Annual Income of less than Rs. 8 Lakh from Income Tax: HC

Exempt all persons with Annual Income of less than Rs. 8 Lakh from Income Tax: HC

The Madurai Bench of the Madras High Court has asked the response of the Center on a petition challenging the fixation of Rs. 2.5 lakh as the base income for the purpose of collecting income tax in light of the recent Supreme Court decision upholding the validity of the 103rd Constitutional Amendment providing reservation to Economically Weaker Sections of society with gross annual income below Rs. 7,99,999.

A Dravida Munnetra Kazhagam (DMK) official has filed a petition with the Madurai Bench of the Madras High Court asking for an exemption from income tax for those making less than Rs 8 lakh per year.

In response to the Supreme Court decision designating families with a gross annual income of less than Rs 8 lakh as belonging to the economically weaker section(EWS) of society, A Kunnur Seenivasan, a member of the DMK’s Assets Protection Council, filed a petition claiming that the section of the Finance Act, 2022 that mandates income tax payment for those with annual incomes over 2.5 lakh is “ultra vires”.

A notice to the Union Ministries of Law and Justice, Finance, Personnel, Public Grievance, and Pension was ordered by the bench of Justices R. Mahadevan and Sathya Narayana Prasad on Monday, and the case was adjourned for 4 weeks.

The petitioner challenged this schedule in light of the Supreme Court’s recent ruling in Janhit Abiyan v. Union of India, which upheld the 10% economic background society reservation while confirming that a socially progressive community family with income up to the limit of Rs. 7,99,999 per year, excluding assets, is a family in the economically weaker section.

The petitioner claims that when the government decides to designate a certain section or group of people as an economically weaker section for the purpose of receiving a reservation by establishing gross income, the exact same standard should be applied to all other sections of the population and it shall not levy income tax on all individuals who fall under this category. Therefore, it is necessary to declare the First Schedule, Part-I, paragraph-A of the Finance Act, 2022, [No. 6 of 2022], as ultra-vires and in violation of Articles 14, 15, 16, 21 and 265 of the Indian Constitution.

Seenivasan further stated in his appeal that the objectives of other provisions found in Articles 15 and 16 of the Indian Constitution were undermined by the office memorandum issued by the Centre designating 8 lakh per year as the criterion for Economic Reservation.

The current Income Tax Act schedule violates the Supreme Court’s ruling since it would force taxation of citizens who are not able to compete economically, socially, or educationally with those from more affluent communities.

“According to the challenged First Schedule, Part-I, paragraph-A of the Finance Act, 2022, [No.6 of 2022], the respondents are allowed to collect income tax from people with incomes between Rs. 2,50,000 and Rs. 7,99,999 annually. However, this would lead to the maintenance of economic inequality among citizens because those with incomes below this threshold are eligible for the Economically Weaker Section reservation, while those with higher incomes are not. Thus, there has been a blatant breach of fundamental rights” the plea claims.

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