• Notification Date: 21-12-2022
• Notification No: N/A

EWS Classifies Individuals Earning Below Rs 8 Lakhs as “Poor” Families

A Member of Parliament, P Bhattacharya recently asked whether it was appropriate that an individual earning ₹2.5 lakh annually be asked to pay income tax. In this regard, the MP pointed out a government notification that states - “a person/family earning ₹8 lakh annually is considered to be poor”. The government's clarification on this question has arrived. 
 
In reply to this question, Union Minister of State for Finance, Pankaj Chaudhary, said that the annual income limit of the family from all sources for the Economically Weaker Section [EWS] group of General categories to avail the benefit of reservation has been fixed at Rs.8 lakh by the Government. This limit of ₹ 8 lakh for qualifying into the EWS category is a gross income limit. It includes the income from all sources of all family members as opposed to the basic exemption limit under the Income-tax Act which is applicable to the income of a single individual. 

The Union Minister of State for Finance added that the basic exemption limit as provided under the Income-tax Act and the threshold income for categorization in the EWS group are computed in a different manner for different purposes. Hence, these two are not comparable by any means. The minister further also explained that income tax deductions are available and a person earning up to Rs 5 lakh per annum is not required to pay any income-tax. 

In January 2019, the Center implemented the 10 per cent reservation for the economically weaker sections (EWS) for the general category by amending the Constitution. In November, a Constitution bench of the Supreme Court comprising of five judges also upheld the EWS quota saying that it does not violate the basic structure of the Constitution.