Benefitting about three crore middle class tax payers, the last Budget of PM Modi-led government Friday announced an income tax rebate to all tax payers with an income of upto Rs 5 lakh per year. This is a 100% increase from the previous exemption limit of Rs 2.5 lakh per year.
Individuals with a gross income of Rs 6.5 lakh per year will not need to pay any tax if they make investments in provident fund, specified savings and insurance, Finance Minister Piyush Goyal said in his maiden Budget, which appeared interim only for the namesake.
In a complete election year give-away Budget, Goyal said the standard deduction for salaried class will be raised to Rs 50,000 from the existing Rs 40,000. This will provide an additional tax benefit of Rs 4,700 crore to more than three crore salary earners and pensioners.
Similarly, the exemption on tax deducted at source on interest earned from banks and post office savings was raised to Rs 40,000 from the present Rs 10,000. The move is expected to benefit small depositors and non-working spouses.
Goyal, however, did not elaborate on where the funds would come from for such a big tax relief. In his Budget speech, Goyal said that the direct tax collection had doubled to Rs 12 lakh crore and the number of tax payers too had increased by 100% in the last five years.
The government is banking on an enhanced tax base and hoping to get a good GST collection over the period of the next year to finance the whopping tax exemptions, an official in the finance ministry said.
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February 01, 2019 at 02:50PM
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