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Panel may push for raising I-T exemption limit to Rs 5 lakh New Delhi
The Standing Committee of Finance may push for raising the income-tax exemption limit to Rs 5 lakh under the Direct Taxes Code (DTC). The Committee also proposes to raise the exemption limit for investment in life and health insurance, expenditure on children's education, besides other instruments. Although, the draft report of the Standing Committee, discussed during its meeting on Friday, talked about raising the tax exemption limit to Rs 3 lakh from Rs 2 lakh proposed in the DTC, a person familiar with the development told Business Line, “keeping rising inflation in mind, a view is emerging that the limit should be higher.” Over 92 per cent of individual taxpayers are in the Rs 0-4 lakh income slab, but it is not commensurate with the tax yield. “If we take the Rs 0-5 lakh tax slab, this share will go up to 95 per cent of the total individual taxpayers, which will translate into more than three crore taxpayers. The Income-Tax Department has already exempted taxpayers in the slab of Rs 0-5 lakh from filing returns. So, there is a strong case for raising the limit to Rs 5 lakh,” he said. Another source said that the Income-Tax Department was already facing a staff crunch, which was affecting assessments. So, it was felt that the focus should not be merely on adding the number of taxpayers, but on those in the higher income bracket. Such a move would allow the department to focus more on untaxed or concealed incomes and on categories that are avoidance or evasion-prone, the source added. Tax Incentives Meanwhile, the draft report is believed to have recommended raising the limit for long-term savings, such as life or health insurance, to Rs 1.50 lakh from the proposed Rs 1 lakh. The combined limit for expenditure on life and health insurance, along with expenditure on children's education, should be raised from the proposed Rs 50,000 to Rs 1 lakh. Further, it is also understood to have said that additional deduction up to Rs 20,000 on account of payment of premium of health insurance for dependent parents should be allowed. It has advised that over and above all the deductions, an additional deduction of Rs 25,000 should be allowed for higher education, especially professional education. [Source: The Hindu Business Line]
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