Government is considering a proposal to raise the tax exemption limit on monthly transport allowance to Rs.3,200 a month from Rs.800. The proposal is being studied by the finance ministry. The move will benefit a large proportion of salaried employees to lower their tax planning by nearly Rs.9,000 a year.
The proposal follows a similar hike for government servants under the Sixth Pay Commission award. However, the private sector employees are expected to benefit as well from the proposal. A decision is expected soon.
In case the proposal materializes, it would lead to an yearly additional exemption of Rs.28,800, and a tax saving of Rs.8,899 a year, including cess, to those in the highest tax bracket.
The Central Board of Direct Taxes, which has the power to formulate and change rules, is exploring the possibility of hiking the exemption through a notification.
source:rtt news
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It should have been done earlier