InvestorQ : What will happen if the tax exemption limit is increased from Rs 2.5 lakh to Rs 3 lakh?
Ashok Patkar made post

What will happen if the tax exemption limit is increased from Rs 2.5 lakh to Rs 3 lakh?

Answer
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Pratik vyas answered.
1 year ago


If Finance Minister Piyush Goyal increases the tax exemption limit from Rs 2.5 lakh to Rs 3 lakh in the upcoming Budget, the aam aadmi will rejoice and welcome the move with open arms.

This is because it will have an impact on too many relatively low-paid individuals.

The current tax slabs for individuals in India are:

Thus, if the Finance Minister hikes the income tax slab to Rs 3 lakh from the current Rs 2.5 lakh, then people earning up to Rs 3 lakh will not have to pay any tax.

Additionally, those individuals having taxable income above Rs 3 lakh will be able to save up to Rs 2,500 (i.e. 5% of Rs 50,000 excluding cess). Here:

- 5% is the minimum tax rate - Rs 50,000 is the difference between the minimum tax exemption amount- Rs 3 lakh – Rs 2.5 lakh.