With the NDA government’s successful re-election, expectations are building up and all eyes are now on the Union Budget 2019. There is a lot of hope among different sections that progressive economic reforms will now be proposed by this government, which has a good five-year period to execute them.
Here are some of the expectations of the common man that the government could consider in the upcoming budget:
Revision in tax rates – The basic exemption limit of Rs 2.5 lakh has not been revised since 2014. The present slab rates, even though recently reduced from 10 percent to 5 percent for income from Rs 2.5 lakh up to Rs 5 lakh, jumps to 20 percent for the next income slab of Rs 5 lakh plus up to Rs 10 lakh . The government could consider rationalising the slabs for this category of income earners and increase the basic exemption limit.
Raising the cap on tax benefit for investments – The limit for deduction under section 80C for tax saving investments was last enhanced in 2014 to Rs 1.5 lakh and covers mostly debt instruments. It is hoped that this limit will be raised to at least Rs 2 lakh to encourage individual income earners to channelise the maximum savings into investments, thus promoting economic growth in their own small way.
Impractical allowances – Two years ago, the government did away with medical and transport allowances provided by the employer. It is time that the government also does a reality check of children education allowance and hostel allowance, which are meagre amounts of Rs 100 and Rs 300 per month, which have never been revised since introduction. The government could also consider granting an annual exemption for Leave Travel Allowance, instead of the current two exemptions in a in a block of four years with a view to promote travel and recreation for the hardworking salaried class.
House Rent Allowance (HRA) – As per the current provisions, an employee staying in the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai can claim higher deduction for HRA. In reality, the rentals in other cities like Hyderabad, Bengaluru, Pune, Ahmedabad, Noida and Gurgaon are equally high, if not higher, due to the fact that there has been a massive movement of population to these cities in response to employment opportunities in the past few years. The government could consider providing a higher HRA exemption to individuals staying in these cities also in view of high rentals
Deduction for home loan interest – The deduction for home loan interest was last raised to Rs 2 lakh in 2014. In order to boost the housing sector and move towards the government’s objective of ‘Housing for all’ by 2022, this limit could be raised to at least Rs 2.5 lakh.
Deduction for savings interest – Currently, deduction is available for savings bank account interest income up to Rs 10,000. Interest income from fixed deposits is not eligible for deduction. However, for senior citizens (aged 60 years and above), the limit is Rs 50,000 and includes interest income from fixed deposits. It is the ask of small savers, to increase the deduction of Rs 10,000 from savings accounts to at least Rs 25,000 and include fixed deposit interest in its scope.
As the common man anxiously awaits good news from the Finance Minister, this may be the right time for the government to thank its people by granting them with some tax sops.
Source : Financial Express