Mumbai: 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," Parizad Sirwalla writes in her moneycontrol.com article.
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.
|Tax slabs||Tax rates|
|Up to Rs 2.5 lakh||-|
|Rs 2.5 lakh - Rs 5 lakh||10 per cent|
|Rs 5 lakh - Rs 10 lakh||20 per cent|
|Above Rs 10 lakh||30 per cent|
|*These are current rates|
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....