Raise income tax exemption limit to Rs 3 lakh

The government must increase the personal income tax exemption limit to at least Rs 3 lakh from Rs 1.6 lakh at present in the upcoming Budget for giving relief to taxpayers from high inflation, majority of CEOs surveyed by industry body Assocham has said.

"In view of the unprecedented inflation particularly the food inflation, the government must increase the personal income tax exemption limit from the existing Rs 1.6 lakh to at least Rs 3 lakh to give adequate relief to the larger sections of the society, added the majority of the CEOs," the pre-Budget survey said.

The Budget 2011-12 would be unveiled by Finance Minister Pranab Mukherjee on February 28. At present, income up to Rs 1.6 lakh is exempted from tax for individuals. For women and senior citizens, the limit is Rs 1.9 lakh and Rs 2.4 lakh, respectively.

However, under the the Direct Taxes Code (DTC) Bill which was introduced in Parliament last year, the I-T exemption limit is Rs 2 lakh. The DTC is expected to replace the 50-year old Income Tax Act from April, 2012.

The survey further said that due to continuous elevated inflation and high commodity prices across globe, there is a strong case for continuation of stimulus package so that the growth momentum is not spiked.

It was a pre-Budget expectations survey conducted under the Associated Chambers of Commerce and Industry of India (ASSOCHAM) with participation from its 1,000 CEOs. Inflation, particularly food inflation, has been a concern for both the government and the common man. For past the few months, food prices are at high levels.

The WPI inflation for December rose to 8.43 per cent, from 7.48 per cent in the previous month. Food inflation, based on wholesale prices, rose to 17.05 per cent for the week ended January 22, on account of escalating vegetable prices, particularly, onions. It was at 15.57 per cent in the previous week.

Around 84 per cent of the CEOs belonging to large, micro, small and medium enterprises polled in the survey held that stimulus package for textiles, gems & jewellery, construction and real estate, cement and steel, among others, should continue for the next fiscal.

Besides, majority of the CEOs also pressed for larger and faster disinvestment in public sector undertakings, proceeds of which should partly be to fund infrastructure augmentation in PPP projects to help India grow and achieve intended growth rate of close to 9 per cent in next 2-3 years.