Will tax slab go up to Rs. 3 lakh?

The Parliament’s standing committee on finance is considering fresh amends in budget 2012. One of them is to increase the exemption for personal income tax from Rs 1.8 lakh to Rs 3 lakh. Besides this, UPA’s Direct Tax Code is likely to recommend several changes in the new budget including linking tax slabs to consumer price indexes – this will permit an automatic adjustment of rates.
In addition to the above, lowering of wealt

h tax threshold and changes in tax benefits for life insurance products are also being considered. Reports suggest that a suggestion has been made to exempt insurance policy dividends from dividend distribution tax.
The panel is headed by BJP leader Yashwant Sinha and is not refusing the DTC bill: it stated that they are hopeful that the government will consider their suggestions seriously.
Backed strongly by finance minister Pranab Mukherjee, the DTC is an important UPA-2 reform – it can help to build bridges with the opposition on key legislative decisions.
Earlier, budget related reforms were hit due to slow-decision making, internal opposition in the UPA or showdowns with opposition BJP party but the government is now keen on bettering reforms this year.
If the standing committee’s view of a Rs. 5 lakh ceiling is accepted, around three crore tax payers in India will benefit by not having to file I-T returns.