With the Budget 2019 session scheduled for tomorrow, taxpayers are expecting some major relief from the Modi government. Speculation is rife that the Modi government might increase the income tax exemption from Rs 2.5 lakh currently to Rs 5 lakh. It essentially means that individuals earning up to Rs 5 lakh will no longer have to pay income tax. Currently, that limit only exempts individuals earning up to Rs 2.5 lakh.
Additionally, industry body has recommended lowering the highest personal income tax slab from 30% at present to 25%. On the other hand, FICCI's wishlist includes a revision of tax slabs with 30% rate applicable to individuals making Rs 20 lakh annual income.
Moreover, tax free medical expenses up to Rs 15,000 and transport allowance up to Rs 19,200 per annum was replaced with Rs 20,000 standard deduction for individuals earning more than Rs 5 lakh last year. It benefited taxpayers and enabled them to save Rs 12,500 annually.
Also read: Union Budget 2019: Fingers crossed on income tax exemption limit!
While governments refrain from making huge announcements in an interim budget, the ruling government is not likely to let this opportunity go. Along with this major change, the Modi government is also expected to present a populist budget to woo the middle class ahead of the Lok Sabha elections this year.If all these expected measures are announced then the ruling government might be able to secure the middle class votes in the upcoming elections. Since the Modi government fell short of its 2014 promises of jobs and other benefits while implementing demonetisation at the same time, the upcoming budget hands over another lifeline to the Modi-led BJP government to make the voters happy.
However, the Modi government will also have to keep in mind the Direct Tax Code Report that is scheduled for February 28 while altering the tax slabs as it has a big chance of quickly turning controversial.
(Edited by Anwesha Madhukalya)