Taxpayers want basic income tax slab to be raised to Rs 5 lakh: Survey

A majority of general tax payers in India want the basic exemption slab limit to be raised from Rs 2.5 lakh currently to Rs 5 lakh. According to a Deloitte survey, 58% of general tax payers said they wanted the slab limit to be raised from Rs 2.5 lakh to Rs 5 lakh.

The report said that this will help widen the tax base and increase compliance. It will place more money in the hands of consumers resulting in increase in demand pick up. It will kickstart savings which will ultimately lead to an increase in investment in the system.

Source: Deloitte Survey

While 28% of the respondents said they wanted the limit to be increased to Rs 3.5 lakh and only 14% want it to be increased to Rs 3 lakh.

Source: Deloitte survey

A large majority (71%) want the limit of Section 80C to be increased to Rs 2.5 lakh. They said that the limit of Rs 1.5 lakh was too low given the inflation and rising income levels.

“Increase in limit will help channelise the household savings to productive avenues such as insurance, provident fund, equity, etc., which will in turn help boost infrastructure spending and job creation,” the report said.

A majority of the respondents in the survey also indicated that the deduction for investment in infrastructure bonds should be introduced with a limit of Rs 50,000. This is given that the government has set an ambitious target to boost infrastructure spending and is in need of long-term funds. So, the respondents feel it is the right time to introduce long-term infrastructure bonds.

Source: Deloitte Survey

The respondents said they wanted the threshold limit for advance tax payments to be increased. 36% of the respondents said the limit should be hiked to Rs 20,000.

Given the increasing cost of medical expenses, most salaried employees (58%) in the survey said that reimbursement of medical expenses by employer should be revised from Rs 15,000 to the limit of Rs 50,000. While 42% of them said that it should be increased to Rs 30,000.

Source: Deloitte Survey

In addition, 55% of the respondents are in favour of the limit for transport allowance to be increased to Rs 5,000 per month from Rs 1,600 currently due to the rising communing costs.