The government is likely to ease the tax burden on the middle class and impose a higher tax on the super rich in its first Budget to be presented by Union finance minister Arun Jaitley next month.
According to sources, the government thinks that the disposable income of the middle class has eroded due to persistent inflation and there is a strong case for providing some tax relief.
Sources added that the government is considering a proposal to raise the tax exemption limit to  Rs 3 lakh from the existing Rs 2 lakh. As per the proposal, under consideration of the government, there would also be a tax on the super- rich bracket, comprising those earning Rs 10 crore or more of 35 per cent. This category would be above the  Rs 1 crore, class which currently pays an effective tax of 33 per cent inclusive of a surcharge that the earlier government had introduced.
The Budget is also expected to raise the limit of exemption for savings under Section 80 C of the income tax limit to Rs 1.5 lakh from Rs 1 lakh. Besides, the exemption from tax on interest paid for a home loan is likely to be raised to Rs  2 lakh from  Rs 1.5 lakh to ease the burden on home buyers.
Some further relief is also likely to be provided in the form of tax exemption on expenditure on health care being raised from  Rs 15,000 to Rs 20,0000. Tax expert Subhash Lakhotia said, " The government should provide substantial relief to tax payers as disposable incomes have gone down every month due to rising prices."