Tax experts are hopeful Finance Minister Pranab Mukherjee will increase the income tax exemption limit to Rs 2 lakh per annum from Rs 1.6 lakh to bring the rates in line with the Direct Taxes Code (DTC). To align the exemption limits under personal income tax with DTC, the Centre is likely to raise the IT exemption limit to 2 lakh,” Balbir Singh Mastan, Partner, DSK Legal said.
High inflation, particularly in the food items, also makes a strong case for raising the tax exemption limit, experts argue.
“Taking into account rising inflation, the Government could raise personal I-T exemption limit,” tax consultant Subhash Lakhotia said.
He further said that in the wake of the issues related to increasing blackmoney, the government should limit tax rates to upto 20 per cent for individuals and 25 per cent for corporates.