Income Tax Exemption Limit can be increased upto Rs 3 Lac

Income Tax Exemption Limit can be increased upto Rs 3 Lac

Finance minister Arun Jaitley may announce during the Budget

The Modi government may declare a raise in the Income Tax Exemption limit from the current 2.5 lacs to 3 lacs. 

Finance Minister Arun Jaitley may announce an increase in the Income Tax Exemption limit to 3 lacs in the 2015-16 budget meeting, which will be a great relief to the taxpayers, particularly for Central Government Employees.

If this proposal is accepted, then there are chances that changes are made in the Income Tax Rate slab, which may also provide relief to the people of the High Income group. 

It is being understood that the government can give a tax exemption up to an annual income of Rs 3 lacs; where a 10% tax was paid for an income between 2.5 to 5 lacs, there it is expected that people with an annual income of Rs 3 lacs to 10 lacs will have to pay a tax of 10%. Similarly, where people with an annual income of Rs 5-10 lacs had to pay a tax of 20%, it is expected that this tax rate would be extended for the income group of 10-20 lacs. 

Similarly, the 30% tax rate for the income above 10 lacs is expected to be increased to a limit between 20 lacs and 1 crore for implementation. It has been told that the government is making easy the path of the High Income group and for above 1 crore, and is in the process of collecting a lump sum of 33% instead of the interest over 30% and surcharge of 10%. 

According to sources, the special Investigation team formed in relation to black money has recommended a maximum cash possession limit of approximately 15 lacs which may also be declared. 

Expected Potential Relief in Income Tax

Present Income Tax Slab

Total amount of Income	Rate (Percentage)
Up to Rs 2.5 Lacs	Nil
2.5 lacs to 5 lacs	10
Rs 5 Lacs to 10 Lacs	20
Above 10 Lacs	30
Above 1 Crore	30 plus 10 percent surcharge

Proposed Income Tax Slab

Total amount of Income	Rate (Percentage)
Up to Rs 3 Lacs	Nil
3 lacs to 10 lacs	10
Rs 10 Lacs to 20 Lacs	20
Rs 20 Lacs to 1 Crore	30
Above 1 Crore	33

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