New Delhi: The apex industry chamber CII on Wednesday pitched finance minister Arun Jaitley to double the income tax exemption threshold to Rs 5 lakh in the forthcoming interim Union Budget on February 1 and increase the deduction limit under Section 80C to Rs 2.50 lakh to incentivise savings.
In a pre-budget memorandum to the finance ministry, CII said that income below Rs 5 lakh should be exempt while between Rs 5-10 lakh should be taxed at a lower rate of 10 per cent. For those having income between Rs 10-20 lakh, the tax rate should be 20 per cent, and those earn over Rs 20 lakh should be taxed at 25 per cent.
It suggested to raise of limit of deduction under u/s 80C from Rs 1.5 lakh to Rs 2.5 lakh to provide saving opportunities to public at large.
Currently, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax, while that between Rs 5-10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent.
CII said that exemptions for reimbursement of medical expenses and transport allowance may be reinstated along with the standard deduction of Rs 40,000.
CII also suggested that corporate tax rate should be reduced to 25 per cent, irrespective of turnover, and should be brought down to 18 per cent in a phased manner.
It is suggested that long term capital loss should be allowed to be set off with short term capital gain and the difference in the tax rates under these sources of income should be paid. “It is suggested that the provisions of section 17 be amended to include retired employees for the tax benefit on medical reimbursements/hospitalisation expenditure, both for domestic and foreign medical treatment,” said CII....