Mumbai: The State Bank of India’s (SBI) economic research wing has called for increasing the various income-tax exemptions limits in the forthcoming Budget to spur consumption and boost growth.
In its Budget wish list, SBI said that the tax exemption limit enjoyed by salaried class should be increased to Rs 3 lakh from Rs 2.5 lakh. It has also proposed increasing the amount of deductions allowed under Section 80CC by Rs 50,000 to Rs 2 lakh besides continuing with the additional deduction of Rs 50,000 permitted under Section 80CCD for the National Pension Scheme (NPS).
“The government have periodically increased the income tax slabs from Rs 22,000 in 1990-91 to Rs 2.5 lakh in 2014-15. Due to the 7th pay commission, the personal disposable income has increased, so we believe there is a need to raise the exemption limit to Rs 3 lakh. Due to such increase in limit, around 75 lakh taxpayers will be exempted from income tax,” said SBI’s chief economic advisor Soumya Kanti Ghosh and author of the report.
It has also requested the government to consider increasing the exemption limit of interest payments for housing loan to Rs 2.5 lakh from the current limit of Rs 2 lakh that would benefit around 75 lakh home loan buyers across the country.
Additionally, SBI also wants the government to incentivise savings through bank deposits by bringing down the lock in period for tax savings term deposits to 3 years from the current 5 years.
“The overall impact of such concessions will result in revenue foregone of around Rs 28,500 crore. We however believe, the Budget will ultimately be a balance between pragmatism and fiscal consolidation,” SBI said in its report.
The report also said that State Bank of India’s expectations regarding the forthcoming Budget are based upon principle of inclusive growth and meeting the medium and long term objectives set by the government.
“As per our reading of the things, Budget should give priority to agriculture, MSME, infrastructure and affordable housing,” it said.
Agriculture reforms should aim at re-examination of legally created structures whose provisions are restrictive and create barriers to free trade, it said.
The Centre in conjunction with states should emulate the price support schemes like in MP and Haryana say ‘Bhavantar Krishi Yojana’ for major crops (including vegetables).
“This scheme will help farmers in situations (when wholesale price of the crop is less than the MSP) and the cost of which is only 10 per cent of farm loan waiver programme as per our estimates. Provision of A2 milk in Mid-day meals for children will create adequate additional income for 16 million farmer per year," the report said.
