RBI Governor wants Income Tax exemption hike
IT is not every day that you find the Reserve bank Governor asking for tax concessions - that is exactly what RBI Governor Raghuram Rajan did yesterday. In a tele conference with tax analysts, the Governor said,
Too many people focus on the producers' side and not on the savings side and we need to keep that in mind. The other aspect is whether there could be some tax benefit to savings. Remember, the government increased the limits for tax benefited savings by Rs 50,000 in the last budget and the question is that is there room for more, primarily because the real tax benefit has fallen over time as the limit was at Rs 1 lakh for too long. Maybe what we have to do is to increase that (tax exemption limit).
The Governor's statement just a few weeks before the Budget is not perhaps very surprising as you need not be the Governor of Reserve Bank to know that the exemption limit will be enhanced. The one lakh limit came in the Finance Act 2005 and remained static till 2014.