In the upcoming Union Budget 2019-20 presentation scheduled for 5 July, the basic exemption limit on personal income tax may be increased, said a Bloomberg report citing sources. It also said that the decision is being considered to push consumption in the Indian economy.
The tax exemption limit may be reportedly increased to Rs 3 lakh for individuals not older than 60 years, up from the current Rs 2.5 lakh. The sources of the report also said the the tax measures have not been finalised.
In the first three months of 2019, GDP (gross domestic product) growth had touched a five-year low of 5.8 percent. The economy slowed down in the last year, with significant drop in consumption seen in passenger vehicles among other consumer goods.
While the increase in tax exemption limit adds to the budget deficit pressure faced every year by the government (projected at 3.4 percent of GDP for FY 2019-20), it will also put an additional disposable income of at least Rs 2,500 in the hands of individual tax payers.
The Bloomberg report also said that the government is looking to hike the tax exemption limit on investments under section 80C, a popular tax saving tool among the middle class section of the country. The limit of exemption is currently set at Rs 1.5 lakh per year.