New Delhi: The last full Union Budget to be presented by Finance Minister Arun Jaitley on Thursday will be unlike his previous four such exercises because of the complete overhaul of the indirect tax regime effected by implementing the Goods and Services Tax (GST) last year.
However, in the area of direct taxes like income tax and corporate tax, Jaitley has hinted at some relief for taxpayers as he made a case for rationalisation of the direct tax structure considering the fact that "the tax base has expanded".
"In income tax, the base has become larger; it's bound to enlarge. And, therefore, charging higher rates from few selected groups -- which has traditionally been done -- is an area which has been changing," Jaitley had said.
It is widely expected that common man may get some relief in income tax by way of a raise in the exemption limit from the current level of Rs 2.5 lakh to Rs 3 lakh per annum.
In his last Budget, Jaitley proposed to reduce existing rate of taxation of those with income between Rs 2.5 lakh to Rs 5 lakh from 10 percent to 5 percent in the Budget.
However, he announced a 10 percent surcharge on individual income above Rs 50 lakh and upto Rs 1 crore to make up for Rs 15,000 crore loss of due to cut in personal I-T rate. Additionally, the 15 percent surcharge on income above Rs 1 crore will continue.
Furthermore, it is also expected that the finance minister to double the medical reimbursement limit from current Rs 15,000 was to Rs 30,000 per annum.
Another major expectation from Jaitley is on increasing the limit of Section 80C of the Income Tax Act that helps in increasing savings of individuals. The deduction limit from Rs 1.5 lakh per year should be increased to Rs 2 lakh to encourage savings under various instruments like PPF, tax-saving FDs etc.