Friday, February 24, 2012

Will FM listen to Standing Committee on relaxing IT slabs?

There is all possibility of some relief to Salary class in the next budget. The Parliamentary Standing Committee on Finance chaired by senior BJP leader Yashwant Sinha, is believed to have recommended raising of income tax exemption limit to Rs 3 lakh and tax breaks on investments to Rs 2.5 lakh.    

Yashwant Sinha raising Hopes
The committee  represents members from both ruling coalition as well as opposition, "There is a consensus among the members that annual tax exemption limit be raised to Rs 3 lakh," sources revealed to media. Raising the tax exemption limit from Rs 1.8 lakh currently, they said, was necessary to provide relief to the people suffering from the impact of high inflation.

Members of the standing committee have also suggested to increase  the total tax saving deduction limit from Rs 1.2 lakh to Rs 2.5 lakh. Under this  investment in provident fund, life insurance, children education and infrastructure bonds, is deducted from income to calculate the tax. In addition, investments up to Rs 20,000 in infrastructure bonds are also exempted from tax.

The government may or may not accept recommendations of the Standing Committee. To bridge the gap of fiscal deficit is first priority of the finance ministry. The direct tax collection  target for the  current financial years were  of Rs 5.32 trillion, which, the government is likely to miss.

According to data released by the finance ministry , net direct tax collection for the period in review is Rs 3.17 trillion, while gross direct tax collected was Rs 4.25 trillion. It is a growth of 14.57 per cent from the Rs 3.71 trillion in the corresponding period last fiscal, whereas this year targets were  based on an estimated growth of 19 per cent.

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