CII suggests income tax exemption to Rs.5 lakh, hiking 80C deduction limit

January 8: The Confederation of Indian Industry (CII) has urged the Centre to double the income tax (I-T) exemption threshold to Rs 5 lakh and increase the deduction limit under Section 80C to Rs 2.50 lakh. This is to incentivise savings in the Union Budget, which will be presented on February 1.

Currently, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax, while that between Rs 5-10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent. The CII further recommended that employer’s contribution to superannuation fund under Section 17 of I-T Act should be removed to avoid double taxation, in line with the taxability of contribution by employer to Provident Funds.

The industry body has recommended that income below Rs 5 lakh should be exempt while between Rs 5-10 lakh should be taxed at a lower rate of 10 per cent. For those having income between Rs 10-20 lakh, the tax rate should be 20 per cent, and those earn over Rs 20 lakh should be taxed at 25 per cent. It also recommended that the limit for claiming deduction under Section 80C of I-T Act be raised from Rs 1.50 lakh to Rs 2.50 lakh to provide saving opportunities to public at large.