New Delhi: The government is contemplating of announcing income tax concessions for individuals in the interim budget next month as the finance ministry feels comfortable on the fiscal deficit front.
“As the government will be presenting just an interim budget and not the full budget, officials are discussing whether such a tax concession could be given. Technically, nothing stops the government from anno-uncing such a measure.
But with general elections just two months away from the interim budget, the appropriateness of such concession could be questioned. Opposition parties, who are already in aggressive mode, could make it an election issue,” said government sources.
Mostly in the past, the government has given concession in the personal income tax by raising the exemption levels.
The main Budget is expected to be presented in July by the new government, which comes into power after the general elections, which are expected to be spread over April and May.
In the last Budget, finance minister P. Chidambaram had left personal income tax slabs unchanged, but had given a minor relief for those at the lower end of the taxable bracket by announcing a tax credit of Rs 2,000 for those with annual incomes of up to Rs 5,00,000.
Currently, people earning less than Rs 2 lakh annually do not need to pay income tax. Any concession in the personal income tax will be seen as an attempt to woo the middle class. The success of AAP in Delhi and the BJP in the recent Assembly elections has raised concern in the government.
The tax concession will also give some relief to the salaried class, which has been facing a high inflation from a couple of years now.
The finance ministry has already started the process of finalising the interim budget. It had asked different central government departme-nts to come up with their demands by January 10. The interim budget is expected to be announced around February 15.
