Budget 2015 – Income Tax Exemption may go up by One lakh

Budget 2015 – Basic I-T exemption limit for individuals may go up to Rs 3 lakh and the investment limit for deduction under Section 80C may rise to Rs 2 lakh

According to sources who were privy to the Budget discussions, finance minister Arun Jaitley may also raise the overall personal income tax exemption level by Rs 1 lakh.

While the basic exemption limit for individuals (other than senior citizens) could go up from Rs 2.5 lakh to Rs 3 lakh, the investment limit for claiming deduction under Section 80C will increase to Rs 2 lakh from Rs 1.5 lakh at present.

The present higher limits for senior citizens would be correspondingly raised. Sources said that the two measures, together, could result in an annual revenue loss of around Rs 30,000 crore to the government and a corresponding boost to household savings, but added that the revenue loss could be stemmed with the current focus on compliance.

Meanwhile, sources added, the CBDT has identified 35 lakh people who have made substantial transactions but have not filed income tax returns and is slated to send letters and notices to them in the coming months seeking explanations.

This is part of a process to bring more people into the tax net and could give a fillip to revenue mop-up. Jaitley, however, is unlikely to alter the income tax rates in the Budget; while some new tax exemptions are on the anvil, several existing ones are set to be scrapped.

Source: Financial Express