ME NEWS BUREAU: Prime Minister Narendra Modi and Finance Minister Arun Jaitley reach out to a conclusion to pour major tax sops to the middle class taxpayers ahead of what may be its final full budget before the 2019 general elections.
Middle class taxpayers are considered to be as a key constituency of BJP.
The major options among the listed proposals of tax benefits are an increase in the exemption limit, a return of standard deduction, increase in health insurance benefits and sops for fixed deposits and benefits.
Modi government in the past had unveiled plans on their pro-poor strategy, but due to the unexpected grim tax collection arised out of GST and the weaker-than-expected corporate tax collection, put them in a tight fiscal situation, given they are in a position to look for multiple options to balance the outgo.
The government also mulls to re-introduce the long term capital gains tax on stock market transactions that it will apply to new transactions above a certain value.
Bombay Stock Exchange (BSE) had long called for the introduction of long term capital gains tax as they believe it will end friction in the market and also tackle manipulation in penny stocks.
Meanwhile the much anticipated tax package doing the rounds will be a political call that will be taken by PM Modi after detailed discussions with Finance Minister Arun Jaitley.
If the government decides to move ahead with a hike in the tax exemption limit, the government has to make sure that it won’t result in a cap on the flagship programmes intended to bolster the marginalized section of the society.
Currently, there is no tax up to Rs 2.5 lakh with investments of up to Rs 1.5 lakh in public provident funds or bank deposits of five years or more enjoying benefits under section 80C of the Income Tax Act.
Modi government also takes a stock on the benefits that can be added on to the health insurance schemes bearing in mind the surge in costs over the medical treatments in the last two-three years.
