In what could be a big relief to the middle-class tax payers, the Narendra Modi government is likely to increase the basic tax exemption limit to Rs 3 lakh from Rs 2.50 lakh at present in the Union Budget 2019, which has been renamed as 'Bahi-Khata'. According to the reports, Finance Minister Nirmala Sitharaman will make the announcement during her maiden budget speech in Parliament.
In the vote on account (interim budget) presented by the acting Finance Minister Piyush Goyal in February this, the Modi government had announced full tax rebate up to income of Rs 5 lakh but left the basic tax exemption limit unchanged.
The government is also likely to increase the deduction limit on saving from the taxable income under section 80C of the Income Tax Act to Rs 2 lakh from the existing Rs 1.5 lakh. An additional deduction of Rs 50,000 for investment in National Pension Scheme (NPS), which was announced in the Union Budget 2015, will take the total saving to 2.5 lakh.
Giving further relief to middle class taxpayers, the government is expected to relaunch the Rajiv Gandhi Equity Savings Scheme (RGESS) with a new name and additional modifications. The scheme was announced by the UPA government in 2012-13 Budget and was aimed at encouraging the flow of savings in the domestic capital market.
This would be another step by the Modi government in order to reduce the income tax burden from common man. During its first tenure, the Modi government has announced several measures to provide relief to the middle class.