Stating that the common man has been impacted badly by high inflation and steady increase in fuel prices, consultancy firm PwC has pitched for a slew of concessions on the income tax front, including relaxation of exemption limit to Rs 3 lakh from the present Rs 2 lakh.
The budget should raise basic exemption limit to Rs 3 lakh from Rs 2 lakh and also introduce a special basic exemption for women at Rs 3.25 lakh beyond which they will come into the tax bracket, the consultancy firm said.
Fears of poor monsoon, which may lead to higher inflation and the ongoing tension in Iraq pushing up fuel prices only add to the worries of the common man, it said.
With the infrastructure sector projected to require investment of over USD 1 trillion in the ongoing 12th Plan, PwC also called for re-introduction of Rs 1 lakh annual exemption for investments in infra bonds.
It also suggested doubling of deduction under Section 80C to Rs 2 lakh, and an increase in deduction for borrowed capital for self-occupied property to Rs 2.5 lakh from the current Rs 1.5 lakh.
PwC said exemption limits on various allowances and reimbursements, set over a decade ago, also merit an upward revision.
It called for upping the medical reimbursements to Rs 50,000 from Rs 15,000 now, conveyance allowance to Rs 2,500 from the present Rs 800 and a five-fold hike in the exemption limit on interest-free/concessional loans to Rs 1 lakh, among other things.
Considering the poor state of finances and the need to control fiscal deficit, PwC said the government can look at introduction of a tax slab for those earning above Rs 50 lakh and recommended a 35% tax for such people.
It also asked for an increase in the wealth tax to 2% for those with wealth of over Rs 10 crore and added that introduction of inheritance tax is also a possibility.
Finance minister Arun Jaitley will present his maiden Budget on July 10 and it is being speculated that he may take some tough, unpopular steps.