NEW DELHI: With the government expecting demonetisation to improve tax mop-up, it may extend the benefit to individual tax assessees by raising the exemption limit to at least Rs 3 lakh and the deduction limit under Section 80C to Rs 2 lakh in the Union Budget for 2017-18, experts maintain.Currently the tax exemption slab is at Rs 2.5 lakh for individuals below 60 years, while deduction under Section 80C of the Income Tax Act is Rs 1.5 lakh. This is expected to improve the collections and give the headroom to the government to extend the benefit to taxpayers," as per consultancy firm PwC. "Soumya Kanti Ghosh, Group Chief Economic Advisor of the State Bank of India, said the coming budget is likely to make a sweeping recast of direct taxes system to give a much-needed boost to the economy following demonetisation.Besides the increase on the tax exemption limit and deductions, he expected some more sops. "I also expect interest exemption on housing loans to be raised from Rs 2 lakh to Rs 3 lakh, and at least reducing -- if not abolishing -- the lock-in period for bank fixed deposits from five years to three years for availing tax exemption," Ghosh told IANS. "Girish Vanvari, Partner and Head of Tax at KPMG, however, said that even though Finance Minister Jaitley will also be viewing the upcoming budget as an opportunity to introduce measures to fuel growth, he may choose not to alter the personal income tax slab rates.

Source: Economic Times January 26, 2017 07:38 UTC