New Delhi: In a bid to provide immediate relief to the middle class, Narendra Modi-led Union government is reportedly mulling to increase the tax exemption limit from Rs 2.5 lakh per annum to Rs 5 lakh a year, in the Interim Budget 2019, which is scheduled to be released on February 1.
At present income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax (see table), while that between Rs 5-10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent. Rs 5 lakh exemption is only applicable to individuals of over 80 years.
The report comes days after Prime Minister Narendra Modi in an interview to news agency ANI, said that the country needs to change its perception towards the middle class.
Hailing middle-class people for making an immense contribution towards the progress India, Modi had said,”The middle class is the only section in the society that bothers about the poorest section and wants maximum benefits to be given to such people. So as a country, it is our not only our responsibility but it is the national duty to uplift the middle class.”
Last year, Finance Minister Arun Jaitley had disappointed individual taxpayers by not announcing any change in the tax slabs . It was expected that the government may increase the limit of income tax exemption from Rs 2, 50,000 to Rs 3,00,000 in Budget 2018-2019.
In Budget 2017-18, Arun Jaitley had proposed a reduction of 5 per cent in income tax rate for individuals with income ranging between Rs 2.5 lakh to Rs 5 lakh. He had also announced surcharge of 10 per cent for those whose annual income is Rs 50 lakh to Rs 1 crore.