Income-tax slabs: A hike in the exemption limit on income tax to keep the middle class happy is likely. The current basic exemption limit of Rs. 2 lakh may be increased to at least Rs. 3 lakh in line with the recommendations of Parliament's standing committee on finance. Currently 90 per cent of tax payers fall in Rs. 2-5 lakh per annum bracket.
Higher taxes on super-rich: To augment its tax collection, Mr Chidambaram may impose a 2.5 to 5 per cent surcharge for individuals earning more thanRs. 20 lakh per annum. This income group contributes 65 per cent to India's income-tax collections and the surcharge will help the government garner Rs.3000-5000 crore.
Investments under Section 80C: This IT Act provides a deduction of Rs. 1 lakh for certain investments. The provision helps people in making forced savings that helps them in the future. There are expectations that tax deduction limits for investments may be hiked by Rs. 50,000 to Rs. 1,50,000.
Tax free re-imbursement limits: The existing tax free limit of Rs. 15,000 may be increased keeping in mind the increasing costs of healthcare. There is an outside change of increase in tax-free limits on transportation allowance, currently capped at Rs. 800 per month.
Interest on home loan: The deduction limit for payment of interest (for self-occupied property) has remained constant at Rs. 1.5 lakh since 2001. Since then, property prices have gone through the roof, increasing the quantum of home loan. An increase in the exemption limit on this count may be expected.
