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House panel seeks raising tax exemption limit to Rs 3 lakh

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A key Indian parliamentary panel is set to recommend raising the personal income tax exemption limit to Rs 3 lakh, according to media reports.

The parliament's Standing Committee on Finance will discuss on Saturday the final draft of its report on the Direct Taxes Code (DTC) Bill. The DTC Bill has the provision of raising the exemption limit to Rs 2 lakh, from the Rs 1.8 lakh being applied at present.

The Committee is headed by former Finance Minister and senior BJP leader Yashwant Sinha.

According to the PTI news agency, the change in tax slab is being mooted on the back of the high inflation that has eroded purchasing power of rupee.

Finance Minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August which was referred to the Standing Committee for scrutiny.

"Although the government is unlikely to introduce the DTC from April 1, 2012, as planned earlier, it may incorporate some of the provisions of the proposed law in the Budget for 2012-13, to be unveiled on March 16," the PTI report said.

Once implemented, the DTC will replace the Income Tax Act, 1961.