The Budget is expected to provide relief to individual tax-payers and marginally increase the exemption limit to Rs 2 lakh bringing it in line with the provisions in Direct Tax Code (DTC). The other tax slabs are also expected to expand. The increase in slabs will promote savings and consumption and provide the much-needed trigger to the economic growth. It will also incentivise people to be covered in the tax net and ensure higher collection from greater compliance.

It is recommended that the standard deduction under Section 16(ii) of the Income-tax Act, 1961 (‘Act'), withdrawn in Assessment Year 2006-07, be reintroduced in this Budget at Rs 50,000.

It is time to revise the deductions and exemptions under the Act. The limits for most of these deductions / exemptions were determined more than a decade ago. Inflation and rapid economic development calls for revision of the limits / caps on such deductions.

Children's education allowance is recommended to be increased from Rs 1,200 per child per annum to Rs 12,000 per child per annum. To provide education with an impetus, a separate section is recommended to be introduced for allowing a deduction for tuition fees paid for education of children instead of being included in Section 80C of the Act.

It is recommended that exemption limit of Rs 15,000 per annum for reimbursement of medical expenses be increased to Rs 50,000 per annum, as it was last revised in Assessment Year 1999-2000.

The limit on deduction of interest on capital borrowed in case of a self-occupied house property should be increased from Rs 1.5 lakh to Rs 3 lakh, since the earlier limit was fixed in 2001. Considering the high rental escalations, maximum deduction under Section 80GG of the Act, available to individuals who do not receive house rent allowance as a part of their salary should be increased from Rs 2,000 per month to Rs 10,000 per month.

Keeping in line with the provisions of DTC, the employer's contribution to superannuation fund ought to be made fully exempt from tax. The limit of deduction under Section 80C of the Act, should also be increased to Rs 2 lakh to boost investment.

There are so many recommendations on our list — all we can do is to hope that the Budget considers them seriously.

(The author is Tax Partner, Ernst & Young. The views are personal.)

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