The Interim Budget expected to show Remarkable changes in the Income-tax exemption limit. According to a report, it is speculated that the income tax exemption threshold for the salaried class would be changed from the current Rs 2.5 lakh to Rs 5 lakh. The interim budget is also expected to bring changes in the ‘tax-free’ status for medical expenses and transport allowance.
As evident from the General Election in the past months, BJP wasn’t able to make it for its good. And, the big reason behind is expected to be the avoidance of the Middle class. Thus, Government has now pulled up socks to turn the Stones in its favour by providing Big reliefs to the Middle class. The changes in the income tax exemption threshold are one of the moves which are likely to be taken by the Government in the time to come for the middle class which has been in strain since demonetisation.
So many major changes are coming as an outcome of the bad election results which does not look very healthy.
The Government sources told IANS that the plan is to streamline the tax slabs in phase with the coming Direct Tax Code. Controversy is expected on the issue of immediate changes done in the tax rates just before the release of the Union Budget which would precede the unveiling of the Direct Tax Code Report on February 28.
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The concept of new Direct Tax Code is an effort to bring more accesses into the tax net and hence making the system more equitable for different classes of taxpayers. It is going to make businesses more competitive by lowering the corporate tax rate and phase out the remaining tax exemptions that lead to litigation and would also redefine the key concepts such as income and the scope of taxation.
In the present scenario, an income up to Rs 2.5 lakh is exempted from personal income tax. A 5 per cent tax is charged on income ranging between Rs 2.5-5 lakh. 20 per cent tax is charged between Rs 5-10 lakh and an Income above Rs 10 lakh would be taxed at 30 per cent. The citizens above 80 Years are offered an exemption of Rs 5 lakh in the current taxation.
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There are some noticeable changes made in the field of Medicine like tax-free medical expenses up to Rs 15,000 and transport allowance up to Rs 19,200 per annum has been replaced with a Rs 20,000 standard deduction charged to those who have earned above Rs 5 lakh last year. This scheme would benefit the taxpayers up to Rs 12,500 annually, which is not significant but yet beneficial.
