Income tax exemption set to go up, announcement likely in interim budget
New Delhi, Jan 15: Finance Minister Arun Jaitley in a pre-poll sop may increase the income tax exemption threshold for the salaried class from 2.5 lakh to Rs 5 lakh.
The middle class which was under considerable strain after demonetisation would benefit from this move. In the interim budget, Jaitley may also reinstate tax-free status for medical expense and transport allowance.
It would be interesting to see, how these changes could be made in an interim budget or vote on account budget, considering not too many policy changes cannot be made. It would be interesting too see how the plan to streamline tax slabs would be made.
Currently income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5 to 5 lakh attracts 5 per cent tax, while that between Rs 5 and 10 lakh is levied with 20 per cent income tax. Income above Rs 10 lakh is taxed at 30 per cent.