Exemption limit for IT payee should be Rs 5 lakh

Exemption limit for IT payee should be Rs 5 lakh

Agency News

Kolkata, June 9: The basic exemption limit for an individual income tax payee should be raised to Rs 5 lakh from Rs 2.50 lakh at present, in the backdrop of the inflationary impact over the years, the ASSOCHAM has proposed in its pre-Budget memorandum to the Government.

“Considering the inflation over the years, the tax exemption limit should be increased from Rs. 250,000 to Rs. 500,000,” the chamber's memorandum to the Finance Ministry stated.
The new government would present its first full Budget to Parliament on July 5, for the current financial year.

The chamber also suggested that ''to bring in the necessary parity amongst salaried and non-salaried taxpayers, it is desirable that standard deduction is reinstated in the statute.

Approximately 20 per cent of the gross salary subject to a maximum limit of, say, Rs.1,00,000 could be considered for the purpose of standard deduction''. There is a disparity between the salaried employees and those carrying on business/ profession, resulting in higher tax being paid by the salaried employees. ''It is equally essential for the salaried individuals to keep abreast with the latest developments in their area of work/ specialisation and hence have to necessarily incur expenses for the same''.

Standard deduction on a salary of Rs 40,000 does not provide any substantial relief to salaried persons and needs to be increased. The standard deduction is not meaningful to a large number of salaried taxpayers as a substantial portion of the deduction is offset by a levy of additional cess of 1 per cent which was levied vide Finance Act, 2018.

To leave more disposable income in the hands of common tax-payer, the ASSOCHAM has also suggested tax reliefs on different heads like medical expenses, leave travel expenses etc. Its pre-Budget memorandum said that tax exemption for LTC or allowance is currently restricted to  the value incurred for travel and it does not include expenses on accommodation or meals.

Besides to promote savings, deduction under section 80C should be raised from Rs.1,50,000 to Rs. 3,00,000 per annum. The current limit needs to be revised with the passage of time. Exemption for children education allowance should be raised from Rs.100 per month to Rs.1,000 per month per child for maximum of 2 children, or actual expenses, whichever is less.