Budget 2019: Govt may set tax exemption limit at Rs 3L

Budget 2019: Govt may set tax exemption limit at Rs 3L

Finance Minister Nirmala Sitharaman holds a pre-Budget consultative meeting with the Finance Ministers of States/UTs in New Delhi on Friday. PTI photo

India is considering increasing the personal income tax threshold in the Union Budget 2019, according to people familiar with the matter, as authorities seek to kickstart consumption in the economy.

Finance Minister Nirmala Sitharaman may raise the tax exemption limit for working-age individuals to Rs 300,000 of their annual income, up from the current Rs 250,000, the people said, asking not to be identified as they aren’t authorised to speak publicly about the proposals. The tax measures haven’t been finalised yet.

Any tax exemptions will add stimulus to an economy that’s slowed sharply this year, with growth reaching a five-year low of 5.8% in the first three months of the year.

The proposed tax move would put at least Rs 2,500 more in the hands of each of India’s 50 million taxpayers. It could also add to pressure on the budget deficit, which is pegged at 3.4% of gross domestic product for the current fiscal year that began on April 1.

The Finance Ministry is also looking at raising the tax exemption limit for savings and investments made under Section 80C of the Income Tax law, the people said. The ceiling is currently set at Rs 150,000.

D.S. Malik, a spokesman for the finance ministry, declined to comment as budget discussions are confidential. Sitharaman is due to present the budget in India’s lower house of parliament on July 5.