(PTI) The finance ministry is considering proposals to benefit the middle class in the Narendra Modi government’s final full budget 2.0 to be presented on February 1 in the Lok Sabha.
The finance ministry is looking at the proposals sent by various government departments on specific measures that can be announced in the Budget, which will benefit a large section of the middle class, sources said.
The government has not increased the income tax exemption limit from ₹2.5 lakh set in 2014 by Finance Minister Arun Jaitley in his first Budget.
Also the standard deduction remains at ₹50,000 since 2019. Many experts believe that the exemption limit as well as the standard deduction should be increased to compensate the salaried middle class for the high level of inflation.
Finance Minister Nirmala Sitharaman’s recent statement that she is aware of the pressures on the middle class has raised hopes that some incentives will come for them in the upcoming Budget.
“I also belong to the middle class so I understand the pressures of the middle class. I identify myself as middle class so I know,” he said earlier this month.
In the same breath, the minister reminded that the current Modi government has not imposed any new tax on the middle class.
He said that the government has taken various measures such as the development of the metro rail network in 27 cities and the construction of 100 smart cities to improve the ease of living.
The minister assured that the government will do more for the middle class as its population is growing and has become big now.
“I recognize their problems. The government has done a lot for them and continues to do the same,” he said noncommittally.
Apart from examining the limit of exemption and standard deduction, the finance ministry is also looking at the possibility of increasing the limit under 80C which includes investment in life insurance, FD, bonds, housing and PPF, among others.
Payments to medical insurance premiums are also being looked at, the sources said, adding, the government may simplify capital gains tax rules to benefit middle class investors who have started investing in capital market.
The insurance industry is asking for a separate provision of tax deductions for life insurance, tax waivers for annuity income, and higher deductions for health insurance premiums.
If there is an increase in the limit under 80C with a special focus on the insurance side, it will help to push for term insurance or other protection schemes, which can provide significant financial protection to the family in case of untimely death. in member earnings, said Max Life Insurance MD and CEO Prashant Tripathy.
First Published: 27 Jan 2023, 08:10 AM IST
