Even though this is an interim Budget, the NDA government may offer big tax cuts to woo the middle class before the general elections. ET Wealth reached out to taxpayers and financial experts to know what they want or expect to see in the Finance Bill 2019.
However, matching these expectations will be a challenge. Already, as per the Budget estimates, the top 10 tax incentives will result in a revenue loss of Rs 75,252 crore this year.
Will people’s expectations burn a big hole in the exchequer? Many people want the basic tax exemption for general taxpayers to be raised to Rs 3 lakh.
This would also require hiking the basic exemption for senior citizens to at least Rs 3.5 lakh. In a way, the basic tax exemption is already Rs 3 lakh for roughly 2.7 crore taxpayers with incomes up to Rs 3.5 lakh by way of the Rs 2,500 rebate under Sec 87A. Of the 5.7 crore people who file their tax return, almost 1.5 crore have an income of over Rs 3.5 lakh.
If their basic exemption is hiked by Rs 50,000, roughly Rs 75,000 crore will escape the tax net, resulting in a tax loss of Rs 3,750 crore (5% of the amount).
Add the higher exemption to senior citizens and both measures could jointly cost the exchequer upwards of Rs 4,000 crore.