Before upcoming Lok Sabha elections, NDA government can bring some good news for all the taxpayers with its interim budget in Budget Session on February 1. According to the sources, Finance Minister Arun Jaitley may double the income tax exemption limit to Rs 5 lakh from Rs. 2.5 lakh.
Finance Minister Arun Jaitley will present interim budget on Feb 1, it will also be the last budget of NDA govt in this term. Currently, income upto Rs 2.5 lakh is exempted from income tax.
Jaitley had raised the exemption limit of income tax from Rs 2 lakh to Rs 2.5 lakh for all individual tax payers below 60 years in first budget of NDA government in July 2014. For senior citizens up to 80 years, the exemption limit was raised from Rs 2.5 lakh to Rs 3 lakh. There was no change in the exemption limit for senior citizens above 80 years.
An industry body, Confederation of Indian Industry (CII), in its pre-budget wishlist, suggested income tax exemption limit to be raised to Rs 5 lakh. CII also recommended lowering the highest income tax slab rate to 25% from 30%.
Finance Minister Jaitley is also likely to increase exemption under 80c to Rs 2.5 lakh from existing Rs 1.5 lakh.
According to the current tax slab, income below Rs 2.5 lakh is tax exempt. Income between Rs 2.5-5 lakh attracts 5% income tax. Income in between Rs 5-10 lakh is taxed at the rate of 20% while anything above Rs 10 lakh is taxed at 30%.