Double Income tax exemption limit to Rs 5 lakh: EY survey

NEW DELHI: The government should double the basic I-T exemption limit to Rs 5 lakh per year and continue with incentives and deductions to corporate houses for stimulating consumption demand and propel private investment post demonetisation, a EY survey said.

In a pre-budget survey by tax consultant EY, an overwhelming 81.42% of the respondents felt the corporate tax rate would be reduced to 25%, from the present 30%, excluding surcharge and cess. In view of the push to 'Make in India', 72%the survey respondents expected the government to continue with sector specific incentives/deductions.

However, majority of respondents felt that to reduce the corporate tax rate, it is imperative to phase out the tax exemptions to meet the fiscal target. On whether the government would reduce personal tax rates or revise the threshold limit to put more disposable income in the hands of the common man to increase consumption and demand, the survey found that almost 60% of the respondents want personal income tax rates be enhanced to Rs 5 lakh.

About 36% of the respondents felt that peak personal tax rate would be cut to 25%. Currently, income over Rs 10 lakh attract peak 30% tax rate.

The survey includes the views of more than 200 CFOs and senior tax professionals from sectors including, automotive, consumer products, life sciences, infrastructure, technology, financial services and others.

“Our survey indicates that corporate India believes that reforms are around the corner. There is a clear expectation of certain tax benefits to individual tax payers so consumption expenditure can increase. “The recent inflow of funds in the banking system and GST are two moves that will allow government an expanded tax base,” EY India Partner and National Tax Leader Sudhir Kapadia said.