Budget should raise I-T exemption threshold to Rs 5.7 lakh, simplify TDS: GTRI
income tax exemption threshold to Rs 5.7 lakh to match inflation, simplify TDS system, and equalise tax treatment for bank deposits and equities, think tank GTRI suggested on Monday. The threshold for an individual's income tax liability has remained unchanged at Rs 2.5 lakh since 2014. Adjusted for an annual inflation rate of 5.7 per cent, Rs 2.5 lakh in 2014 is equivalent to just Rs 1.4 lakh today.
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To maintain the same real value, the threshold under the old regime of individual's taxation should reasonably have been Rs 5.7 lakh. This adjustment is necessary to ensure that tax levels remain consistent with 2014 standards, GTRI said.
It said the minimum wage for a skilled worker in Delhi is Rs 21,917 per month or Rs 2.63 lakh per annum. Many lower-income professionals, such as drivers or multi-tasking staff, could be spared of tax return filing
The Global Trade Research Initiative (GTRI) also suggested raising fixed deductions and exemptions.
The Rs 10,000 deduction for savings deposit interest, set in 2013, is worth only Rs 5,000 today. It should be raised to Rs 19,450 by 2025 to account for inflation.
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