New Delhi: Assocham has asked the government to increase the personal income tax exemption limit in budget to Rs 4 lakh from Rs 2.5 lakh for all individual taxpayers.
The industry body also demanded additional incentives for savings and higher tax allowance for expenditure on education and health, quoting findings from its Aam Aadmi survey.
"Over 87 percent respondents in the poll said increasing the basic tax exemption limit from the present Rs 2.5 lakh to Rs 4 lakh should be the minimum that the Finance Minister should announce in the 2016-17 budget," Assocham stated.
The industry chamber also recommended a hike in personal IT exemption limit to Rs 4 lakh in its pre-budget memorandum.
"The higher exemption limit was necessitated by increasing cost of living, particularly with regard to health, education and transport," it added.
Besides, noting that the amount of medical expenses reimbursed by the employer on treatment of employees or their family members is exempt from tax to the extent of Rs 15,000 per annum, 88 percent of the respondents advocated hiking the limit to Rs 50,000 per annum as the present threshold was set way back in 1998.
Similarly, deduction of Rs 15,000 under section 80D for payment of medical insurance premium was set in the year 2008. In order to encourage and bring more people under the health insurance umbrella, the deduction should be increased to Rs 50,000, said majority of the respondents.
The poll was conducted in cities like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Dehradun etc. About 500 employees from different sectors were covered by the survey from each city on an average.
Majority of respondents said leave encashment exemption limit for tax calculation should be raised to Rs 10 lakh as the current limit of Rs 3 lakh was notified by the CBDT way back in 1998.
Also the children education allowance exemption limit should increase from the present Rs 100 to Rs 1,000 per month. Likewise, the hostel expenditure allowance which is presently exempt up to Rs 300 per month per child for maximum of two children be increased to Rs 3,000 per month, Assocham said.
Over 72 percent of the respondents said rising interest rates on home loans and skyrocketing property prices call for doubling the exemption limits for interest on self occupied property to Rs 3 lakh from Rs 1.5 lakh set in 2001.