Government reviewing tax exemption slab, says MoS Finance Santosh Gangwar

As the countdown begins for budget, expectations are high on tax relief for the common man. With demonetisation jolting the industry, hopes are high that the government will provide more spending power to the middle class.

Minister of State for Finance, Santosh Gangwar spoke to India Today on pre-budeget expectations and said, "The government is aware of tax relief demands to hike the exemption limit. We are reviewing the proposal."

The current tax exemption limit is upto Rs 2.5 lakh annual income, which according to sources could be hiked in the upcoming budget.

Another big announcement expected is on the digital economy push. Recently, Andhra Pradesh Chief Minister Chandrababu Naidu-lead demonetisation panel mooted the idea of tax on cash withdrawal for over Rs 50,000 and cap on large cash transaction to incentivise digital payments.

While the finance ministry has claimed that it is reviewing these proposals, another big step that the government may announce could be on Merchant Discount Rate (MDR) that banks charge retailers every time a debit card and credit card is swiped.

"We want to promote cashless economy and now the situation is improving everyday. Currently, consumers don't have to pay any charge on card transaction but we will review all the measures to promote digital economy," said Gangwar.

With almost 80 days complete since 86 per cent of the currency was withdrawn from the market, the budget could also throw light on cash withdrawal curbs. For now, the ATM withdrawal limit has been restricted to Rs 10,000 daily while saving banks withdrawal is capped at Rs 24,000 weekly.

"While in urban areas there are no issues, rural areas do have some restrictions still and we will remove these limits soon," he said.

But what can be counted as a relief for many, who were spooked by speculation on 'junk tax' for now, Gangwar brushed aside any additional tax to reduce fat consumption.