The government is likely to provide some relief to
individual income tax payers in the forthcoming Budget
by raising the exemption limit to Rs 2 lakh, as provided
in the Direct Taxes Code (DTC), and hiking the slabs for
different tax brackets.
The possibility of lowering the tax rates, however, is
remote in view of the fiscal constraints being faced by
the government, sources said, adding that the government
will take on board some of the key recommendations of
DTC, which is currently being scrutinised by the Parliamentary
Standing Committee, has suggested that the income tax exemption limit be hiked
to Rs 2 lakh from Rs 1.8 lakh at present.
It also proposes that the highest personal income tax rate of 30 per cent should
apply to annual income above Rs 10 lakh, as against Rs 8 lakh.
The Finance Minister, Mr Pranab Mukherjee will be unveiling the Budget proposals
for 2012-13 sometime around mid—March.
The industry too is demanding that in view of high inflation, the income tax
slab should be increased although the government may retain the existing tax
CII Director General, Mr Chandrajit Banerjee suggested that basic exemption
limit should be increased from Rs 1.8 lakh to Rs 2.5 lakh for individuals.
“We have suggested that the income in the range of Rs 2.5 lakh to Rs 6 lakh
should be taxed at the rate of 10 per cent, whereas that in the next slab up to
Rs 10 lakh can be taxed at the rate of 20 per cent. Above Rs 10 lakh, it should
be taxed at 30 per cent,” Mr Banerjee said.