New Delhi: Industry chamber Assocham urged the government on Sunday to raise tax-exempted savings limit to Rs.2.5 lakh, from the current Rs.1.5 lakh, and re-introduce standard deductions for salaried employees to boost the domestic demand.
"Assocham has recommended to the government to increase the deduction for long term savings to Rs.2.5 lakh and re-introduce the concept of standard deductions for salaried employees who can then give a boost to consumption demand and boost economic growth," the Associated Chambers of Commerce and Industry said in a statement here.
"In order to benefit the salaried employees, the standard deductions should be reintroduced as one-third of salary or Rs.200,000 whichever is less."
In its pre-Budget memorandum to the finance ministry, the Assocham has suggested revision of the deduction of interest on housing loans to at least Rs.3 lakh from the existing Rs.2 lakh and a similar limit be set for principal loan repayment from the current Rs.1 lakh.
To benefit salaried employees, the chamber recommended that the leave encashment exemption limit for tax calculation should be raised to Rs.10 lakh.
"The current limit of Rs.3 lakh was notified by the Central Board of Direct Taxes way back in 1998 and needs to be raised substantially," Assocham president Sunil Kanoria said.
The organisation has also sought re-fixing of the monetary limits under house rent (HRA) and transport allowance, as well as children's education.
For salaried employees, transport allowance up to Rs.800 is at present exempt from tax per month, which limit should be raised to Rs.3,000 per month, it said.
Besides, it suggested that a provision may be made in the law that any expenditure incurred by an employee for education of under-privileged children by making payment directly to a recognised school should be allowed as deduction from salary income up to Rs.1,000 per month for maximum of two children.
Assocham also suggested a depreciation allowance for salaried tax-payers in line with professionals, saying the deduction of depreciation is allowed under the head Business and Profession. No tax benefit is accrued to the salaried employees when they add assets, even though the assets get depreciated when owned by an employee.