Budget 2019: Bad news for taxpayers as Nirmala Sitharaman unlikely to hike income tax exemption limit; here's why

In what may come as a bad news for the salaried class and taxpayers in the forthcoming Union Budget 2019, the government is unlikely to raise the current basic income tax exemption limit of Rs 2.5 lakh.

Country's first woman full-time Finance Minister Nirmala Sitharaman will table the Budget on July 5. (File Photo/ Getty)

Budget 2019: In what may come as a bad news for the salaried class and taxpayers in the forthcoming Union Budget 2019, the government is unlikely to raise the current basic income tax exemption limit of Rs 2.5 lakh. Country's first woman full-time Finance Minister Nirmala Sitharaman will table the Budget on July 5. Government sources close of news agency IANS informed that as the Finance Ministry, during its Interim Budget 2019 on February 1, has already announced a provision whereby individuals earning up to Rs 5 lakh can get full tax rebate under Section 87A. Those earning Rs 5 lakh per annum will, however, be required to file tax returns even if they have zero tax liability. After the previous announcement, it was also largely expected from the Modi government to increase the basic income tax exemption limit from Rs 2.50 lakh to Rs 5 lakh. Though there is an expectation among salaried class that the Modi 2.0 government would reward them for voting it to power, officials here have earlier said that increasing the basic exemption limit to Rs 5 lakh will defeat the purpose of the interim budget announcement. Another reason why the government is not planning to hike the exemption limit is the fact increasing the basic exemption limit will not require many people to file income tax and it could result in a dip in tax filing and would also be a bad move as the government plans to increase its tax base. During its pre-Budget meeting, several tax experts also advised Sitharaman not to hike the tax exemption as it would not be a right move keeping in mind government's focus has been on increasing country's taxpayer base. According to the Finance Ministry sources, there is also little possibility that the government would tweak the existing tax slabs in a way that a 10 per cent tax rate applies to those earning up to Rs 10 lakh, instead of the existing 20 per cent. There could also be some additional tax-saving measures for salaried individuals. As per government data, the income tax collections have been lower than expected which also does not support any possibility of raising the exemption limit. Sources also pointed out that there is no possibility of the threshold for the highest 30 per cent tax rate being raised to apply to incomes above Rs 15 lakh in the upcoming Budget but could happen in future years. The government also aims at increasing the revenue from taxes as it needs to invest aggressively to revive growth and consumption making the possibility of hike in income tax exemption limit very minimal.