Tax exemption cap at R1.5 lakh to boost domestic savings likely

Finance minister Pranab Mukherjee is likely to increase the income tax exemption limit on individual savings from R1 lakh at present by up to R50,000, in a bid to raise the savings rate which has been falling since 2007-08.In recent Budget meetings with ministry officials, Mukherjee has indicated his desire to raise the exemption limit, a senior official said on condition of anonymity.The savings rate is estimated to have fallen sharply by as much as 500 basis points in the current fiscal from its pre-crisis peak of 36.9% of GDP in 2007-08 as per RBI and CSO data.

Source: Financial Express