Union Finance Minister Arun Jaitley on Monday said that taxation is a major tool available to the government to remove poverty and inequality and that it had to be cautiously exercised. In his budget, Jaitley announced relief to small tax payers.
The ceiling of tax rebate under Section 87A of IT Act has been proposed to be raised to Rs 5,000 from Rs 2,000 for individuals with income less than Rs. 5 lakh. With this, Jaitley said around 2 crore tax payers would get a relief of Rs 3,000.
The limit of deduction of house rent paid under section 80GG has also been raised to Rs. 60,000 from the existing Rs. 24,000 per annum to give relief to employees who live in rented houses.
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Under the presumptive taxation scheme under Section 44AD of the Income tax Act, the limit of turnover or gross receipts has been raised to two crore rupees from the existing one crore rupees to benefit about 33 lakh small business people.
The scheme frees a large number of such assesses in the MSME category from the burden of maintaining detailed books of account and getting an audit done.
The presumptive taxation scheme is to be now extended to professionals with gross receipts of up to Rs. 50 lakh with the presumption of profit being 50 per cent of the gross receipts.