Salaried peoples expectations from Budget 2017-18
New
Delhi: Finance Minister Arun Jaitley unveils the budget on 1 February.
The salaried class has a lot of expectations from the Budget. Increase
in the personal income tax exemption limit and a higher deduction limit
on home loan interest are among the common ones, say analysts.
The following salaried people's expectations from FM Jaitley’s Budget 2017-18:
1. Raise minimum limit for taxable income
Considering
the increase in cost of living, the current basic exemption limit of
2.5 lakh should be raised to Rs. 3 lakh. If the minimum limit is
increased, it will not only benefit taxpayers at the bottom but also
salaried class youth who are starting out as employees.
2. Change in tax slabs
A
Change in of tax slabs will be a big balm for the salaried class.
Currently, 10 per cent tax is charged on annual income of Rs 2.5 lakh to
Rs 5 lakh, 20 per cent on Rs 5 lakh to Rs 10 lakh and 30 per cent on
income above Rs 10 lakh. The first two slabs can be widened or taxed at a
lower rate.
3. Raise exemption limit on allowances
Salaried
employees enjoy exemption from tax on several allowances/benefits that
the employer provides such as children's education, conveyance, medical
reimbursement, house rent and leave travel. The allowance limits were
fixed a long time ago and need to be revised in view of inflation.
4. Increase deduction under Section 80C
Currently,
deduction under Section 80C of the Income-tax Act is allowed from Rs
150,000 to Rs 300,000. If Jaitley increases the limit, he can boost
household savings which can ultimately get invested and power growth.
5. Bring back deduction on infrastructure bonds
The
government may reintroduce deduction of Rs 20,000 or actual amount
invested, whichever is lower, for investments made in infrastructure
bonds. This will also boost spending, spur growth and create more jobs.
6. Offer more incentives for NPS investment
Jaitley
can offer more incentives for taxpayers to invest in the National
Pension System (NPS). He can increase the deduction under Section 80CCD
(1B) to Rs 100,000 from the existing Rs 50,000. He can also being NPS on
par with the Employees Provident Fund or Public Provident Fund with
respect to exemption of 100 per cent of the accumulated balance on
withdrawal, subject to certain conditions.
7. Offer interest subvention on home loans
Prime
Minister Narendra Modi has already offered interest subvention of 3 per
cent and 4 per cent for loans of up to Rs 12 lakh and Rs 9 lakh,
respectively, under the Pradhan Mantri Awas Yojana. However, these
subventions are targeted at buyers in Tier 3 cities. Budget 2017 has
scope of offering interest subvention on larger amounts of loan which
will benefit buyers in big cities and other urban areas.
8. Allow higher deduction on home loan EMIs
Currently,
the deduction available on interest on home loan is up to Rs 2,00,000.
The deduction can be claimed on the principal repayment for up to Rs
1.50 lakh. There is a large scope in both cases to raise the deduction
limits.
9. Allow early deduction on home loan EMIs
Deduction
for interest on home loan is currently available only after the buyer
gets the possession of the property. This means the benefit begins
several years after the buyer gets the home loan and begins paying the
EMIs. This deduction can be given right from the payment of the first
EMI.
10. Raise exemption limit for senior citizens
The
existing exemption limit of Rs 300,000 for senior citizens (60 years to
less than 80 years) and Rs 500,000 for super senior citizens (80 years
and above) could be enhanced to Rs 400,000 and Rs 600,000 respectively.
TST
