Union Budget 2017: Basic exemption limit on income tax could be increased to Rs 3.5 lakh
Besides the increase in the tax slabs there is also expected to be an increase in the exemptions under 80C.
In moments the Finance Minister Arun Jaitley will take to the stage to announce the Union Budget 2017. This year's Budget is something all will be looking towards as a way to get consumption back on track after demonetisation had derailed it a few months back. One of the key expectations in terms of personal income tax side is the increase in the basic exemption limit from Rs 2.5 lakh to Rs 3.5 lakh and the rationalisation of tax slabs.
This could be possible this year to give a push to consumption after the impact of demonetisation and also being a year in which key state elections are also going to be contested.
Apart from this, there could also be an increase in the exemptions under 80C to move up from Rs 1.5 lakh to Rs 2.5 lakh.
To bring parities in Net Pension Scheme versus Provident Fund, withdrawal of NPS proceeds to be fully exempted is another key point to look out for.
According to a Prabhudas Lilladher report the government could look at investments in instruments which fund long term infrastructure bonds to be tax exempted with limit of Rs 50,000.
Another expectation is that Section 80TTA (interest on SA assets) extended to time deposits and increase to Rs 20,000 from existing Rs 10,000. With the rising medical costs today there is a need to increase the exemptions under medical expense from Rs 15,000 to Rs 50,000.
However, on the other hand there is a possibility of the government re-introducting standard deduction for salaried class with limit of Rs 50,000 – 1,00,000
Some the other exemptions on personal income tax include the increase in transport allowance from Rs 1,600 per month to Rs 5,000 per month. Education allowance Rs100 per month per child, Rs300 per month per child for hostel expenses etc to be increased. Interest on self occupied property limit to be increased from existing Rs 2 lakh.
Interest subvention announced for house loan upto Rs 1.2 million at 3% and upto Rs 0.9 million at 4% to continue.