Budget 2018: Will Jaitley rejig tax slabs, raise IT exemption limit?

The expectations are that the Finance Minister may raise the limit beyond which Income Tax would have to be paid to Rs 3 lakh per annum.

There are a lot of expectations from Finance Minister Arun Jaitley as this would be the last full-fledged Budget of the NDA government, which took office in 2014. Jaitley has to make sure that the budget has something in it for the masses or the middle class. Along with economic implications, Budget 2018 will also have a significant political impact.

The expectations are that the Finance Minister may raise the limit beyond which Income Tax would have to be paid to Rs 3 lakh per annum. Presently, no income tax is currently payable on the amount of upto Rs 2.5 lakhs. It is possible that the limit may now be increased to Rs 3 lakhs per annum. However, with the fiscal deficit likely to soar it would be impossible to hope for anything beyond this.

As against the current tax slab rate of 20% for those with annual income in the range of Rs. 5-10 lakh, the ministry could lower rate by 10%. For those earning between Rs. 10-20 lakh can be put in the 20% bracket while 30% can be levied for income beyond Rs 20 lakh.

In the last budget, marginal relief by way of tax rate reduction from the erstwhile 10% to 5% was brought about for those with annual income in the range of Rs. 2.5 to 5 lakhs.

The rising crude oil prices and subdued indirect tax collection post the roll out of GST has put burden on the fiscal deficit target of the government which was pegged at 3.2% of the GDP. And to meet the shortfall, the government recently resorted to additional borrowing of Rs 50,000 crore. The revision in income tax slab is being encouraged upon by industry bodies including Ficci as it is of the view that the effect of demonetisation may continue for some mote time and demand has to be strengthened across the economic landscape.

OneIndia News with PTI inputs