In what could come as a major relief for the tax-payers, the Centre is likely to increase the Income Tax slab limit for exemption from Rs.2 lakh to Rs.5 lakh.
According to sources, the Finance Ministry has also sought a report on the same from the I-T department. The CBTD is likely to submit a proposal by June 20.
Sources further added that the government is also considering raising the tax exemption limit on home loans and health insurance premium.
The health insurance premium is likely to be raised by Rs.5,000
Centre may hike Income Tax exemption limit from Rs 2 lakh to Rs 5 lakh-IBN
New Delhi: In what could probably become one of the landmark reforms by the Narendra Modi government, sources tell CNN-IBN that the Centre is likely to increase the Income Tax slab limit for exemption from Rs 2 lakh to Rs 5 lakh.
The Finance Ministry has also sought a report on the same from the I-T department, say sources. The CBTD is likely to submit a proposal by June 20, added sources.
Sources further said that the government is also considering raising the tax exemption limit on home loans and health insurance premium.
The health insurance premium is likely to be raised by Rs 5,000, as per sources.
Budget 2014-15: Govt may raise income tax exemption limit by Rs 1 lakh-Business Today
The Modi government is likely to ease the tax burden on the middle class and impose a higher tax on the super rich in its first Budget to be presented by Union finance minister Arun Jaitley next month.
According to sources, the government thinks that the disposable income of the middle class has eroded due to persistent inflation and there is a strong case for providing some tax relief.
Sources added that the government is considering a proposal to raise the tax exemption limit to Rs 3 lakh from Rs 2 lakh. According to the proposal, under consideration of the new government, there would also be a tax on the super- rich bracket, comprising those earning Rs 10 crore or more of 35 per cent. This category would be above the Rs 1 crore, class which currently pays an effective tax of 33 per cent inclusive of a surcharge that the earlier government had introduced.
The Budget is also expected to raise the limit of exemption for savings under Section 80 C of the income tax limit to Rs 1.5 lakh from Rs 1 lakh. Besides, the exemption from tax on interest paid for a home loan is likely to be raised to Rs 2 lakh from Rs 1.5 lakh to ease the burden on home buyers.
Some further relief is also likely to be provided in the form of tax exemption on expenditure on health care being raised from Rs 15,000 to Rs 20,0000. Tax expert Subhash Lakhotia said, " The government should provide substantial relief to tax payers as disposable incomes have gone down every month due to rising prices."
PM Narendra Modi’s gift: No income tax likely up to Rs.3 lakh-Hinduatan Times
Finance minister Arun Jaitley may have some good news for the salaried class in the budget for 2014-15.
The government is learnt to be gearing up for an overhaul of India’s tax regime by considering a restructuring of tax slabs and increasing the income tax exemption limit from the existing Rs. 200,000 to more than Rs. 300,000 —a move that would leave more money in the hands of people.
A rejig in income tax slabs is also on the cards, the details of which are being currently examined.
At present, there are three tax slabs. Those with an income of less than Rs. 2 lakh a year are exempt from paying taxes. Those earning between R2 lakh and R5 lakh annually are taxed at 10%, those between R5 lakh and R10 lakh at 20% while anybody earning more than R10 lakh pays a tax of 30%.
Banks seek tax breaks on deposit income-Times of India
MUMBAI: In a move that is likely to benefit consumers and boost infrastructure finance, bankers will seek tax breaks on deposits and long-term bonds. Public sector banks will submit to the government their capital requirements if credit is to grow by 16% during FY15.
Finance minister Arun Jaitley will meet with CEOs of leading banks, financial institutions and economists as part of his pre-Budget consultations. Sources said that the meeting might not be restricted to just pre-Budget suggestions and that the finance minister might seek feedback on long-term capital requirements and consolidation in the banking industry. Bankers said that bad loan resolution was also one of the issues that they would raise. RBI has provided a special dispensation allowing banks to spread the losses arising out of sale of bad loans at a discount to asset reconstruction companies (ARCs) over the next two years. Banks said that they would seek some fiscal relief as well.
"We have already sensitized the government on a few issues on the direct tax side and a few on the service tax side. We have also given our suggestion on larger policy matters on getting stalled projects up and running," said M V Tanksale, chief executive of the Indian Banks' Association. One suggestion from the banks is that interest income from bank deposits should be subject to indexation benefit. In other words, tax would be paid only on the real returns above the rate of inflation.
Speaking to TOI, a senior banker said that going forward mobilizing deposits to fund growth could be a challenge. Banks are facing competition from fixed maturity plans of mutual funds, government small saving schemes and tax-free bonds of financial institutions. "For tax payers, it does not make sense to maintain fixed deposits which attract tax. Post tax, the returns drop to around 6% which, in real terms, is a negative return after factoring inflation," he said.
The banker also said that creating avenues for long-term funds was imperative. "Given the state of Indian bond markets, the burden of funding infrastructure is going to fall on banks. Allowing banks to float long-term bonds, which are either tax-free or exempt from reserve requirement, would enable banks to provide long-term loans," he said.
The consultation comes close on the heels of the FM's meeting with financial regulators - including Reserve Bank of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory Authority - in Mumbai on Saturday. Although the meeting was part of the quarterly gathering of regulators under the aegis of the Financial Stability Development Council, the finance minister had used the opportunity to obtain feedback from banks.
On Saturday, during his Mumbai visit, Jaitley said that the government would provide its response after it had applied its mind to the recommendations. The committee has suggested that the government transfer its holding in public sector banks to a holding company - a move which will reduce government influence on the management and enable them raise more capital from the markets.
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