Reliefs for the middle class will be announced in the next budget

- The government has not raised the income tax exemption limit from Rs 2.5 lakh which was set by the then finance minister Arun Jaitley in his first budget in 2014.

The finance ministry is mulling proposals to benefit the middle class in the Modi 2.0 government's last full budget to be presented in the Lok Sabha on February 1. The finance ministry is looking into proposals sent by various government departments on specific measures that could be announced in the budget, which would benefit a large section of the middle class, sources said. The government has not raised the income tax exemption limit from Rs 2.5 lakh which was set by the then finance minister Arun Jaitley in his first budget in 2014. Also standard deduction from 2019 to Rs. 50,000 remains unchanged. Some experts are of the opinion that the exemption limit as well as the standard deduction needs to be increased to compensate the salaried middle class for the high level of inflation.

Finance Minister Nirmala Sitharaman's recent statement that she is aware of the pressure on the middle class has raised hopes that some incentives may come for them in the upcoming budget. I am also middle class so I can understand the middle class pressure. I identify myself with the middle class so I know. He made this statement earlier this month. However, he reminded that the current Modi government has not imposed any new tax on the middle class.

He said that the government has taken various steps like developing metro rail network in 27 cities and creating 100 smart cities to promote ease of living.

The government can do more for the middle class because its population is growing and it is now bigger. The government has done a lot for them and will continue to do so.

The finance ministry is also looking at increasing the limit under 80C which includes investments in life insurance, FD, bonds, housing and PPF etc. Paying medical insurance premiums is also being looked at, sources said, adding that the government may ease capital gains tax rules to benefit middle-class investors who have started investing in the capital market.

The insurance industry is exercising separate tax deduction provision for life insurance, tax exemption for annual income and higher deduction for health insurance premiums.

If the limit under 80C is increased with a special focus on the insurance segment, it will help push term insurance or other protection schemes, which can provide the much needed financial security to the family in case of untimely death of an earning member.