In its pre-Budget recommendations to the Finance Ministry, industry chamber CII has suggested doubling the income tax exemption threshold to Rs 5 lakh as well as hike in the Section 80C deduction limit to Rs 2,50,000 from Rs 1,50,000.
The industry chamber in its suggestions for the interim Union Budget, to be presented on February 1, has also asked for reduction in corporate tax rate to 25 per cent unconditionally without any turnover criteria and further reduction to 18 per cent in a phased manner.
The CII has also suggested lowering the highest personal income tax slab to 25 per cent from 30 per cent at present and allow exemption for medical expenses and transport allowance. Currently, annual income up to Rs 2.5 lakh is exempt from personal income tax, while annual income between Rs 2.5-5 lakh attracts 5 per cent tax and that between Rs 5-10 lakh attracts 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent.
The industry body has recommended that income below Rs 5 lakh should be exempt while between Rs 5-10 lakh should be taxed at a lower rate of 10 per cent. For those having income between Rs 10-20 lakh, the tax rate should be 20 per cent, and those earn over Rs 20 lakh should be taxed at 25 per cent, CII said.
Ahead of the upcoming general elections this year, Finance Minister Arun Jaitley will present an interim Budget for 2019-20 on February 1. The next elected government will then bring the final budget for the 2019-20 financial year.