The Union Government has now made it clear it will hold
Union Budget 2017-18 in Parliament on February 1 and that it won’t budge
to Opposition’s pressure for a shift in date. What does the Union Budget have
in store for the salaried class and individual taxpayers in particular?
There is much anticipation that there will be an increase in
the exemption limit on personal income tax in the range of Rs 3 lakh
to Rs 4 lakh. Taxpayers can expect an exemption up to Rs 4 lakh as it
would alleviate their fiscal woes that were result of abrupt notes recall. "The
present Government’s objective of having globally competitive tax rates has
been pointing in this direction," Sirwalla who is Partner and Head of
Global Mobility Services – Tax of KPMG India also writes that personal
income tax collection between April-December 2016 going up by 21.7 per
cent further raises hopes for change in income tax slabs. Finance Minister Arun
Jaitley in his brief on tax collection figures during April-December 2016 said
that direct tax collections went up by 12.1 per cent and indirect tax
collections were up by 25 per cent. This also increases the chances of an
increase in exemption limit in Budget.
A cashless economy, less cash economy, digital economy and
eradication of shadow economy have been the government’s top agenda that would
influence evaluation of various tax rates by the government.
An increase of Rs 50,000 will take the exemption limit to Rs
3 lakh per annum which at present is Rs 2.5 lakh; and that does not seem to be
implausible. Experts believe government may go for an increase in exemption
limit to up to Rs 4 lakh per annum given uncertain fiscal environment in
country due to demonetisation.
Last time government raised exemption limit on personal
income tax was in Budget 2014-15 when Finance Minister Arun Jaitley
presented his maiden budget of the newly-elected government. It raised
exemption for individual taxpayer to Rs 2.5 lakh from Rs 2 lakh and for senior
citizens the limit was raised to Rs 3 lakh from Rs 2.5 lakh per annum. Under
section 80C of the Income Tax Act, an investment of up to Rs 1.5 lakh was
exempted, a limit that was earlier Rs 1 lakh. Deduction for interest on home
loans was also raised from Rs 1.5 lakh earlier to Rs 2 lakh.
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