Budget 2017 should look to increase the monthly transport allowance limit that is exempt from tax, recommends the CII.
Union Budget 2017 should look to increase the monthly transport allowance limit that is exempt from tax, recommends the CII. According to the Confederation of Indian Industry (CII), this tax-exempt transport allowance per month should be increased to a minimum of Rs 5,000. In its pre-Budget 2017 memorandum, the CII notes, “The transport allowance granted by the employer to the employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty is currently tax exempt up to Rs 1600 per month in terms of Section 10(14) of the Act read with Rule 2BB of the Rules.” “This exemption limit seems quite nominal considering the ever rising fuel costs and resultant conveyance costs,” says CII.
With this in mind, CII has urged Finance Minister Arun Jaitley that, “The exemption limit of Rs 1,600 per month needs to be considerably raised upwards, say to minimum of Rs 5,000 per month to bring it in line with the rising conveyance costs.”
Narendra Modi government’s Budget 2017 is widely expected to be taxpayer friendly, especially keeping in mind the post-demonetisation effects and pain that people had to bear. CII also recommends that the basic limit for tax exemption and other income slabs should be enhanced to give benefit to low income group. CII wants the Finance Minister to implement the recommendations of the Parliamentary Standing Committee on Finance (PSC) with regards to income tax slabs.
According to CII, income up to Rs 3 lakh should be exempt from taxation. For income between Rs 3 lakh to Rs 10 lakh, a tax rate of 10% should be applicable. Between Rs 10 lakh to Rs 20 lakh, the rate should be 20% and only for income above Rs 20 lakh should the 30% tax rate be applicable.
Currently, less than 3% of the population files income tax returns and a higher tax exemption slab and a reduced tax rate may encourage more people to file their tax returns. With inconvenience caused to the common man by demonetisation, many are expecting the government to increase tax exemption from Rs 2.5 lakh to Rs 4 lakh. Section 80C has a maximum limit of Rs 1,50,000 and most of the investments come under this bracket. Some experts are of the view that The FM may revisit and increase the limit up to Rs 2,00,000. This would also encourage individuals to save more and contribute towards the economy.