Industry chamber CII has recommended the government to double the income tax exemption threshold limit to ₹5 lakh and increase the deduction limit under Section 80C to ₹2.50 lakh which is ₹1.50 lakh now to incentivize savings in the Union Budget to be presented on February 1st, 2019.
In his pre-Budget recommendations to the finance ministry, the CII also suggested lowering the highest rate of personal income tax to 25% from 30% and also allow an exemption for medical expenses and transport
Currently, income up to ₹2.5 lakh is exempt from income tax for individuals. Income between ₹2.5-5 lakh levied 5% tax, while that between ₹5-10 lakh is attracting with 20% tax. Individual income above ₹10 lakh is
taxed at 30%.
The CII has recommended that income below ₹ 5.0 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 for them should be 20%, and those earning over ₹20 lakh should be taxed at 25%.
In view of the forthcoming general elections in 2019, Finance Minister Arun Jaitley will present in Parliament an interim Budget for 2019-20 on February 1st. The new government will come out with the final budget for the financial year.
The industry body (CII) also suggested that the corporate tax rate should be reduced to 25%, irrespective of total turnover, and should be brought down to 18%.
It also recommended that the limit for claiming deduction under Section 80C of Income Tax Act be raised from ₹ 1.50 lakh to Rs. 2.50 lakh to provide saving opportunities to individuals at large.
“The exemptions for reimbursement of medical expenses and transport allowance may be re-established along with the standard deduction of Rs. 40,000,” the industry body (CII) said.
CII also suggested that long term capital loss should be allowed to be set off with short term capital gain.
The Confederation of Indian Industry (CII) further advocated that the employer’s share to superannuation fund under Section 17 of Income Tax Act, 1961 should be withdrawn to avoid double taxation, in line with the taxability of share of contribution by the employer to Provident Funds (PF).