New Delhi: Finance Minister Nirmala Sitharaman should consider increasing the income tax exemption limit to at least Rs 3 lakh and abolish minimum alternate tax (MAT) for companies to boost consumption and economic growth, suggested tax experts.Sitharaman, the first full-time woman finance minister, is set to present her maiden Budget on July 5 in the Lok Sabha."The government should consider raising the limit of tax-free income to at least Rs 3. Incentives provided in the form of exemptions/deductions provided to infrastructure companies get offset by MAT, he said."The government may raise the basic exemption limit by Rs 50,000 (from Rs 2."As most of these incentives have already reached a sunset stage, the possibility of further extending benefits to newly set up entities needs to be considered," Vasudevan said while making a case for the abolition of MAT.The Economic Survey for 2019-20 will be tabled on July 4 followed by the presentation of the Budget the next day.5 lakh thus reducing the tax burden from 20 per cent to 5 per cent for this category," he said.  

Industry chambers like CII and Ficci have already made detailed presentations on their suggestions for the Budget.The first session of the newly-elected 17th Lok Sabha will be held from June 17 to July 26.In the run-up to Budget 2019-20, she would be holding intensive consultations with trade and industry bodies, besides other stakeholders.For instance, the applicability of MAT on companies enjoying tax holidays needs to be reconsidered as it entails additional cash outflow in the initial years.5 lakh to Rs 3 lakh) extending the benefit to all or alternatively, 5 per cent slab may be raised from Rs 5 lakh to Rs 7.The PwC tax expert also suggested that to give a push to the housing sector and also incentivise the taxpayers to buy their own house, the deduction for housing loan interest may be raised to Rs 3 lakh from the current Rs 2 lakh and the cap of set-off of loss against other income may be removed.S Vasudevan, Partner with law firm Lakshmikumaran and Sridharan, said that certain provisions in the Income Tax Act need to be revisited to reduce hardship. But in the next consecutive budgets, it did not give many benefits to individual taxpayers."By raising the limit of deduction under Section 80C and for interest on housing loan, the government would be able to channelize more savings in the economy and ensure housing for all under the Pradhan Mantri Awas Yojana," he said.. The rebate was earlier capped at income of up to Rs 3.5 lakh, Rs 3 lakhs for Section 80C deductions and Rs 3 lakh for interest on housing loan.

Industry chambers, China Wholesale Ice cleats in their representation to the finance ministry, have also pressed for the abolition of MAT and reduction in corporate and personal income tax as these steps would help in increasing consumption and in turn promote economic growth."Apart from adversely impacting the cash flows, many times the companies are not able to fully utilise the MAT credit in future years.In her budget, the 59-year-old JNU alumnus Sitharaman will have to address slowing economy, financial sector troubles like rising NPAs and liquidity crisis in NBFCs, job creation, private investments, exports revival, agrarian crisis and raise public investment without compromising on fiscal prudence.

Naveen Wadhwa, DGM, Taxmann, said the first NDA government in its maiden Union Budget presented in 2014 had raised the tax exemption limit, interest on housing loan and Section 80C of IT Act deductions.The move largely benefited the lower income group whereby individuals with income up to Rs 5 lakh have to pay no taxes.In the interim budget presented in February, the government had extended full tax rebate to those having an income of up to Rs 5 lakh without any change in the tax slabs."While India will not remain unaffected from the global economic situation and domestically too there are challenges, the common man does have lot of hope (from the Budget)," said Kuldip Kumar, Partner & Leader, Personal Tax, PwC India.5 lakh.