Union Budget 2017: Govt likely to raise tax slab from 2.5 lakhs to 3 lakhs

This year Budget can bring some cheers to service class as government is likely to bring some key changes in the direct tax regime. Experts believe that the changes in income tax slabs are more likely to be introduced as government is looing for options to boost economy following a demonetization move on November 8.

A research report by SBI, Ecowrap also says that the  upcoming Budget is likely to see an increase in personal income tax exemption limit, increase in section 80C exemption limit, interest exemption on housing loan and at least reducing (if not abolishing) the lock in period for bank fixed deposits.

The key changes in tax slabs can according to SBI ecowrap reports are

• Personal income tax exemption limit from Rs 2.5 lakh to Rs 3.0 lakh
• Increase in section 80C exemption limit from current Rs 1.5 lakh to Rs 2 lakh
•  Interest exemption on housing loan from Rs 2 lakh to Rs 3 lakh
• At least reducing (if not abolishing) the lock in period for bank fixed deposits from 5 years to 3 years for availing tax exemption

The report, authored by Soumya Kanti Ghosh, Chief Economic Adviser & GM, Economic Research Department, SBI noted that “such giveaways will cost Rs 35,300 crore but we expect this to be more than balanced by IDS2 revenue and cancelled note liabilities of RBI”.

Tax collection under IDS

SBI Research expects tax collection under IDS to be around Rs 50,000 crore and cancelled liabilities from RBI to be around Rs 75,000 crore.