Investments and expenses up to Rs 3.5 lakh will become tax-free if the government accepts a parliamentary panel's suggestions in the Direct Taxes Code Bill.
The amount will include Rs 50,000 spent each on senior citizens in the family and children's higher education in professional courses.
The parliamentary panel on finance that adopted its report on the bill on Friday recommended that exemption on long-term investments be raised from Rs 1 lakh to Rs 1.5 lakh.
The cap for expenses on life and health insurance premiums and children's education are also proposed for a raise from Rs 50,000 to Rs 1 lakh. The Centre aims to enact the Direct Taxes Code from April 1 next year.
Sources said panel members Bhartruhari Mahtab (BJD), SS Ahluwalia (BJP) felt individual investments in the social sector should be increased and tax exemptions were a major way of mobilising it.
The panel felt financial relief on expenses in higher education had not been changed since 1996 while the costs had increased manifold.