Assocham for raising tax exemption limit to Rs 5 lakh in Budget

New Delhi: The basic exemption limit for an individual income tax payee should be raised to Rs 5 lakh from Rs 2.50 lakh at present, in the backdrop of inflationary impact over the years, industry chamber Assocham has said.

It has suggested this in a proposal to the government as part of its pre-Budget memorandum.

"Considering the inflation over the years, tax exemption limit should be increased from Rs 2,50,000 to Rs 5,00,000," the chamber's memorandum to the Finance Ministry stated.

The government is scheduled to present its first full Budget on July 5, for the current financial year. It also suggested that to bring in the necessary parity among salaried and non-salaried tax payers, it is desirable that standard deduction be reinstated in the statute.

"About 20 per cent of the gross salary subject to a maximum limit of, say, Rs 1,00,000 could be considered for the purpose of standard deduction," it added.

The industry body said that there is a disparity between the salaried employees and those carrying on business/ profession, resulting in higher tax being paid by the former.

To leave more disposable income in the hands of common tax-payer, the chamber asked for tax reliefs on different heads like medical expenses, leave travel expenses etc.

Tax exemption for LTC or allowance, it said, is currently restricted to the value incurred for travel and it does not include expenses on accommodation or meals.

''In case of travel, significant costs would be incurred on accommodation and food and hence, the exemption should cover these as well," it said.