Demonetisation has raised high revenues for the government, and the 2017-18 budget might have some good news for the individual taxpayers. The next year's budget might witness an increase in income tax exemption limits and also a reduction in IT rates. 

 

The Deccan Herald quoted a top official as saying, “The monetary gains will be utilised for infrastructure development, but a part of it will also be used to spur demand in the economy and one way will be to give tax breaks to bonafide taxpayers”. 

 

The individual taxpayers can also be given ₹5 lakh flat tax exemption and no other income tax rebates. There is also a possibility of an increase in tax exemption limit from ₹2.5 lakh to ₹3.5 lakh and continuation of certain tax deductions. 

 

As per different sources, the government is working on different possibilities but yet to take a decision which will take some time.  

 

An official disclosed that, if the exemption is ₹5 lakh, the applicable income tax rates could be 10% between ₹5 lakh to ₹10 lakh income per annum, 20% will be for income between ₹10 lakh to ₹20 lakh, and for ₹20 lakh and above income tax rate could be 30%.  

 

Recently, finance minister Arun Jaitley also commented that demonetisation will bring down the IT rates and provide tax relief to honest taxpayers.