Monetary limits in the Income-tax Act, 1961

Issue/Justification

The monetary limits for all exemptions or deductions were provided long back. In has been long since the same have been revised considering the prevailing inflationary conditions in India. An effort has been made to compile all such monetary limits with the Cost inflation index (CII) of the year in which they were last revised and the CII of the year 2015-16 to arrive at the figure of tentative present limit. The same is given as an Annexure to this memorandum.

Suggestion

Considering the Cost inflation Index (CII) of the year in which the various monetary limits under the Income-tax Act, 1961 were last revised and the CII of the year 2016-17,  an effort has been made to make a comparative statement of the present limit and the figure of tentative limit, had the CII been applied to them, has been prepared. The same is given as an annexure to this memorandum. It is suggested that the present monetary limits be revised upwards appropriately.

Limits for various salary related allowances exempt from tax

Issue/Justification

Currently following is the limit for certain tax free allowances:

Sr. No Salary Component Existing exemption limit
1 Medical Reimburs ements Rs 15,000 p.a.
2 Children Education Allowance Rs 100 per month per child
3 Children Hostel Allowance Rs 300 per month per child
4 Lunch / refreshment perks (i.e. Meal Coupons) Rs 50 per meal

These limits have been fixed more than a decade ago.

Suggestion

It is recommended to enhance these limits to the following:

Sr. No Salary Component Recommended exemption limit
1 Medical Reimbursements Rs 50,000 p.a.
2 Children Education Allowance Rs 500 per month per child
3 Children Hostel Allowance Rs 1,500 per month per child
4 Lunch / refreshment perks (i.e. Meal Coupons) Rs 100 per meal
Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
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Category : Income Tax (27900)
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Tags : Budget (1957) Budget 2018 (400) ICAI (2673)

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