FM may hike tax exemption limit from Rs 250,000 to Rs 300,000: Sources

The middle class can hope for a big relief in UNION BUDGET, which will also be the last regular Budget of the NDA government, as the finance ministry is contemplating to hike personal tax exemption limit and tweak the tax slabs, according to sources.

The proposal before the ministry is to hike the tax exemption limit from the existing Rs 250,000 per annum to at least Rs 300,000 if not Rs 500,000, they said.

Besides, the tinkering of tax slab is also being actively considered by the ministry to give substantial relief to middle-income group, especially the salaried class, to help them tide over the impact of retail inflation, which has started inching up.

In the last Budget, Finance Minister Arun Jaitley left the slabs unchanged but gave marginal relief to small tax payer by reducing the rate from 10 per cent to 5 per cent for individuals having an annual income between Rs 250,000-500,000.

In the next Budget to be unveiled on February 1, the government could lower tax rate by 10 per cent on income between Rs 500,000- one million, levy 20 per cent rate for income between Rs one-two million and 30 per cent for income beyond Rs two million.

"Considering the steep rise in cost of living due to inflation, it is suggested that basic limit for exemption and other income slabs should be enhanced to give benefit to the low-income group. The income trigger for peak rate in other countries is significantly higher," industry chamber CII said in its pre-Budget memorandum to the finance ministry.