Tax free medical expenses up to Rs 15,000 & transport allowance up to Rs 19,200 per annum has been replaced with a Rs 20,000 standard deduction for those earning above Rs 5 lakh last year
The Hush Post| 9:12 am |one-minute-read
Finance Minister Arun Jaitley could double the income tax exemption limit for the salaried people. The present tax exemption limit is Rs 2.5 lakh. Now it could be raised to Rs 5 lakh while also reinstating tax-free status for medical expenses and transport allowance, providing some relief to the section already under stress since demonetisation.
Currently, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax, while that between Rs 5-10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent. Though, the Rs-5-lakh-exemption is there at present, but it is only applicable to individuals who are more than 80 years.
Also, tax free medical expenses up to Rs 15,000 and transport allowance up to Rs 19,200 per annum has been replaced with a Rs 20,000 standard deduction for those earning above Rs 5 lakh last year. This will benefit tax payers to the tune of Rs 12,500 annually which is not much but can be viewed as a sentiment buster.
This could come at a time when the BJP government seems apprehensive of the possibility of a middle-class backlash during the upcoming general elections.
The BJP-led dispensation realises that as an incumbent it will have to fight off several challenges.
With acute farm distress, middle class backlash, unemployment taking its toll, BJP would like to unleash course corrections. The 10 per cent quota for upper castes was part of this process to appease vote banks. But this was an executive decision adopted by parliament, tinkering with the tax structure similarly is a legislative decision.
Income Tax Slabs for Individual Tax Payers and HUF (Less Than 60 Years Old) for FY 2018-19:
Income Tax Slabs
Up to Rs 2,50,000* No tax
Income from Rs 2,50,000 – Rs 5,00,000 5 per cent
From Rs 5,00,000 – 10,00,000 20 per cent
Income more than Rs 10,00,000 30 per cent