As the apt saying goes “Rumors are like ripples in a cornfield. They are ephemeral, but they do indicate which way the wind is blowing”. Speculations are running rife that the government might consider major tax cut within its 2019 interim budget and also consider increasing the basic tax exemption limit ahead of the general elections.
When Narendra Modi’s administration unveiled their first budget for India, it was a clean clear harbinger better future. Everyone was happy by the budget due to its consideration in increasing the basic tax exemption limit and tax deduction under section 80C. Surprisingly enough subsequent budgets have not been citizen friendly budgets. For example, the surcharge of 10% on income above 1Rs core increased from 12%-15% in 2015. The one that left peopleconfused was last year’s 10% tax on LTCG from Equity investments above Rs 1 Lakh in a year.
With few weeks left to the interim 2019 budget, there are high expectations of citizen tax-friendly budget. Though for some these expectations to take effect then a lot of amendments must be done to section 80C to review some of the laws. But truth be told increasing basic tax exemption limit is difficult since it may lead to a tax loss of the exchequer. It was ascertained that every Rs 10,000 increase in the basic tax exemption led to a tax loss of approximately Rs 2,000crore for the exchequer. An increase in the basic tax exemption limit is the only way to benefit all taxpayers.