Finance minister Arun Jaitley may have some good news for salaried women in the budget with the government reportedly examining a proposal for higher income tax exemption limit for women.
This marks the return to an earlier practice when women were offered a higher tax relief after the 2012-13 budget fixed a Rs. 200,000 exemption limit for both women and men.
Moreover, a proposal to reduce the age for tax exemption for senior citizens to 60 years from 65 years is also under consideration.
The move, sources said, could be part of plans to overhaul India’s tax regime by restructuring tax slabs and increasing the minimum income tax exemption limit for men from the existing Rs. 200,000 to more than Rs. 300,000 —a move that would leave more money in the hands of people.
The exemption limit—the threshold income below which individuals are not liable to pay taxes—for women could be fixed at between Rs. 3,25,000 to Rs. 3,50,000.
The proposed move will enhance people’s disposable income, boosting consumption spending and savings, while helping households manage their monthly budgets better.
The government is negotiating through a maze of thorny issues ahead of this year’s budget amid faltering demand and rising prices that have hit growth in the broader economy.
Jaitley is also considering a rejig in income tax slabs, details of which are being currently examined.
At present, there are three tax slabs. Those with an income of less than Rs. 2 lakh a year are exempt from paying taxes. Those earning between Rs. 2 lakh and Rs. 5 lakh annually are taxed at 10%, those between Rs. 5 lakh and Rs. 10 lakh at 20% while anybody earning more than Rs. 10 lakh pays a tax of 30%.
In addition, last year’s budget also saw the introduction of an additional surcharge of 10% on “relatively prosperous” persons with a taxable income of more than R1 crore. There were supposedly only 42,800 of such people in the country.
Sources also said that the government is examining whether some proposals of the draft Direct Taxes Code (DTC) Bill 2013 including a tax on “super-rich” can be introduced in this year’s budget, likely on July 10. The draft DTC Bill had proposed a higher 35% tax for the super-rich -- who earn more than Rs. 10 crore a year -- and a wealth tax on host of assets such as expensive paintings.