The Finance Ministry may double income tax exemption threshold from Rs 2.5 lakh to Rs 5 lakh for the salaried class.
At present, income up to Rs 2.5 lakh is exempt from personal income tax. Salary between Rs 2.5-5 lakh attracts 5 percent tax , between Rs 5-10 lakh attracts 20 percent tax and above Rs 10 lakh attracts 30 percent. The exemption of Rs 5 lakh is applicable only to individuals over the age of 80.
With the income tax limit being increased from the current Rs 250,000 to Rs 500,000, it could potentially help people save more which will eventually result in an increase in investment and liquidity in the system.