New Delhi, February 13
A vast majority of salaried class people employed in a host of trade and industry sectors want the Finance Minister to raise the exemption limit of income tax to Rs 3 lakh and increase deductions such as medical and educational allowances in the Union Budget so that they are left with more purchasing power, a survey by industry body Assocham across major cities has indicated.

The slab of tax-free income has not moved up in line with real inflation. The current basic tax exemption limit of Rs 2 lakh should be increased to at least Rs 3 lakh with the limit for women going up to Rs 3.50 lakh. This will increase the purchasing power of individuals and stimulate demand.

“Pushing the basic exemption limit will help tax payers save taxes and will further align it with the proposals made by the parliamentary standing committee on direct taxes code (DTC),” the survey noted.

With increasing healthcare costs, the existing tax-free limit of Rs 15,000 should be increased to Rs 50,000.

The transportation allowance granted to employees to commute between the place of work and residence is tax-free to the extent of Rs 800 per month.

This limit was fixed more than a decade ago and needs to be revised upwards to at least Rs 3,000 per month, given the rising commuting costs across the country, adds the survey.

“The deduction limit for payment of interest on self-occupied property has remained constant at Rs 1.50 lakh since 2001. There is an increase in property prices and accordingly, the amount of loan. An increase in the exemption limit to Rs 2.50 lakh will be a welcome change,” says the Assocham survey.

Further, Section 80C of the IT Act provides for deduction of Rs 1 lakh for certain investments. This provision helps people make forced savings, thereby safeguarding their future. A common man expects this limit to be increased to Rs 2 lakh with sub-limit of Rs 50,000 exclusively for insurance and pension, the survey adds.