Industry chamber CII has urged the government to double the income tax exemption threshold to ₹5 lakh and increase the deduction limit under Section 80C to ₹2.50 lakh to incentivise savings in the Union Budget to be presented on February 1.
In its pre-Budget recommendations to the finance ministry, the CII also suggested lowering the highest personal income tax slab to 25% from 30% at present and allow exemption for medical expenses and transport allowance.
Currently, income up to ₹2.5 lakh is exempt from personal income tax. Income between ₹2.5-5 lakh attracts 5% tax, while that between ₹5-10 lakh is levied with 20% tax. Income above ₹10 lakh is taxed at 30%.
The industry body has recommended that income below ₹5 lakh should be exempt while between ₹5-10 lakh should be taxed at a lower rate of 10%. For those having income between ₹10-20 lakh, the tax rate should be 20%, and those earn over ₹20 lakh should be taxed at 25%.
In view of the forthcoming general elections, Finance Minister Arun Jaitley will present in Parliament an interim Budget for 2019-20 on February 1. The new government will come out with the final budget for the fiscal.
The CII also suggested that corporate tax rate should be reduced to 25%, irrespective of turnover, and should be brought down to 18% in a phased manner.
It also recommended that the limit for claiming deduction under Section 80C of I-T Act be raised from ₹1.50 lakh to ₹2.50 lakh to provide saving opportunities to public at large.
“The exemptions for reimbursement of medical expenses and transport allowance may be reinstated along with the standard deduction of ₹40,000,” the CII said.
It also suggested that long term capital loss should be allowed to be set off with short term capital gain.
The CII further recommended that employer’s contribution to superannuation fund under Section 17 of I-T Act should be removed to avoid double taxation, in line with the taxability of contribution by employer to Provident Funds.
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