“After the bold and historic decision of demonetization, the expectation from the forthcoming budget has gone up particularly in relation to income tax. Many citizens have gone through the tough liquidity position and they have accepted the harsh move in anticipation of tax reliefs in the next Budget.
The Minimum exemption limit is expected to be increased from Rs 2.5 lacs to Rs. 3 lacs or even Rs. 3.5 lacs. There may be no change in the 30% tax bracket, which starts from an annual taxable income level of Rs. 10 lacs. Even PM hinted in his speech on the evening of 31st Dec that the total number of Tax Payers in the 30% tax bracket are only 25 lacs and the actual number may be much higher.
Another expectation is for an increase in deduction limit u/s 80C from Rs. 1.5 lacs to Rs. 2 lacs. In order to boost equity market, this additional deduction may be attributed to investment in ELSS schemes only.
Similarly, in order to grow the Pension Sector, deduction limit u/s 80CCD(2) towards contribution to NPS may get enhanced from Rs. 50000 to Rs. 1 lac.
On the whole, some relief may be announced but these reliefs will be much lower than what the middle-class income tax payers are hoping for.”
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