 "Union Budget 2018 : The Common Man's Expectations from Budget 2018")
The financial year 2017-18 has been a game changer for the Indian economy. With GST replacing the existing flawed VAT regime and demonetisation closely following, it was a year of bold steps and reforms. The previous budgets of current government were regarded as unambitious by many experts and the general public. But with aforementioned milestones achieved, budget 2018 is one where expectations of the common man are riding high.
Tax Slab Revision
This is the most desired wish on common man’s list of expectations from the budget. After demonetisation, the government added Rs54 lakh new individual taxpayers in 2017 whereas Goods and Services Tax (GST) brought Rs92283 crore to government’s coffers. With widened tax base, low evasion and high tax revenues from direct and indirect taxes, every taxpayer is expecting that the direct tax rates will be lowered and the limit of non-taxable income increased. A recent survey by the citizen and community engagement platform LocalCircles revealed that 31% respondents want an increase in tax exemption limit to Rs3 lakh and 37% want tax slabs to lower the income tax burden.
Loss from House Property
RERA has come as a big relief for home buyers across India. It has tightened norms for builders and brought about measures to cushion aggrieved buyers. But a lot is left to be desired by Income Tax rules and rebates in this regard. The existing limit of loss on house property is Rs2 lakh under section 24 and it can brought forward only for next eight consecutive years. It is difficult to achieve such profits from a property in the first eight years given that loan installments are very high. The extension of the period or raising the limit from existing Rs2 lakh can benefit many homeowners.
Preconstruction Interest
The preconstruction interest on the home loan can be claimed in 5 equal installments after completion of construction subject to an overall limit of Rs2 lakh under section 24. The government should either provide this deduction separately (and not under section 24) or raise the limit to include the preconstruction interest portion separately under section 24.
Increasing Deduction on Investments
The present limit of Rs1.5 lakh as a deduction under section 80C towards investment in PF, PPF, Insurance, NSC, etc. is inadequate. With FD interests falling at an all-time low and general public turning to alternative investment avenues, raising this limit of the deduction would be a welcome move.
Repealing Dividend Distribution Tax
An increasing number of individuals are now investing in mutual funds and markets. In light of this development, the government should either lower or repeal the Dividend Distribution Tax. This tax is paid by the entity that is distributing dividends, but in many cases where there is an option, they tend to retain dividend to avoid taxes. This finally affects individuals and retail investors.
Tax-Free Medical Reimbursements
Currently, there is a cap of Rs15000 on tax-free medical reimbursements for salaried individuals. The cost of healthcare has posted an increase of 14% from 2014 to 2016 and increasing further. This is why the present tax-free exemption is in urgent need of revision.
Contribution to NPS
The National Pension Scheme (NPS) is aimed at providing a financial cushion to people during their twilight years. However, the deduction allowed towards the contribution to this fund is only Rs1.5 lakh under Section 80CCD (1). In order to give a boost to this scheme and to ensure its success in meeting the intent, the government should consider increasing the limit.
Tax-Free Gratuity
The employees of the formal sector are entitled to Rs10 lakh of tax-free gratuity after 5 or more years of service. There is a wide expectation that this figure would be increased to bring it in line with a tax-free payout of central government employees, which is Rs20 lakh.
Standard Deduction
Before 2006-07, there used to be a concept of the standard deduction for salaried taxpayers. It was meant for sundry expenses that an individual incurs in the course of employment on day to day basis but does not get reimbursed from the employer. Without giving any proof of expense, a fixed amount was allowed as deduction. This provision should be brought back for the benefit of salaried employees who are made to pay taxes on gross salary received.
Reduction of GST rates
There has been a rise in prices of certain products and services after GST was introduced. The general public would like to see cutting down on GST rates on insurance products, education, transportation and such other essential products and services that are used by people of all strata.
The budget 2018 is critical not only for common man but also for the government. It is completing four years in power and with various reforms already undertaken, public now wants some results in the form of easing of tax regimen which is one of the most complex and highest in the world.
Click here to get latest updates on Budget 2018
Tax Slab Revision
This is the most desired wish on common man’s list of expectations from the budget. After demonetisation, the government added Rs54 lakh new individual taxpayers in 2017 whereas Goods and Services Tax (GST) brought Rs92283 crore to government’s coffers. With widened tax base, low evasion and high tax revenues from direct and indirect taxes, every taxpayer is expecting that the direct tax rates will be lowered and the limit of non-taxable income increased. A recent survey by the citizen and community engagement platform LocalCircles revealed that 31% respondents want an increase in tax exemption limit to Rs3 lakh and 37% want tax slabs to lower the income tax burden.
Loss from House Property
RERA has come as a big relief for home buyers across India. It has tightened norms for builders and brought about measures to cushion aggrieved buyers. But a lot is left to be desired by Income Tax rules and rebates in this regard. The existing limit of loss on house property is Rs2 lakh under section 24 and it can brought forward only for next eight consecutive years. It is difficult to achieve such profits from a property in the first eight years given that loan installments are very high. The extension of the period or raising the limit from existing Rs2 lakh can benefit many homeowners.
Preconstruction Interest
The preconstruction interest on the home loan can be claimed in 5 equal installments after completion of construction subject to an overall limit of Rs2 lakh under section 24. The government should either provide this deduction separately (and not under section 24) or raise the limit to include the preconstruction interest portion separately under section 24.
Increasing Deduction on Investments
The present limit of Rs1.5 lakh as a deduction under section 80C towards investment in PF, PPF, Insurance, NSC, etc. is inadequate. With FD interests falling at an all-time low and general public turning to alternative investment avenues, raising this limit of the deduction would be a welcome move.
Repealing Dividend Distribution Tax
An increasing number of individuals are now investing in mutual funds and markets. In light of this development, the government should either lower or repeal the Dividend Distribution Tax. This tax is paid by the entity that is distributing dividends, but in many cases where there is an option, they tend to retain dividend to avoid taxes. This finally affects individuals and retail investors.
Tax-Free Medical Reimbursements
Currently, there is a cap of Rs15000 on tax-free medical reimbursements for salaried individuals. The cost of healthcare has posted an increase of 14% from 2014 to 2016 and increasing further. This is why the present tax-free exemption is in urgent need of revision.
Contribution to NPS
The National Pension Scheme (NPS) is aimed at providing a financial cushion to people during their twilight years. However, the deduction allowed towards the contribution to this fund is only Rs1.5 lakh under Section 80CCD (1). In order to give a boost to this scheme and to ensure its success in meeting the intent, the government should consider increasing the limit.
Tax-Free Gratuity
The employees of the formal sector are entitled to Rs10 lakh of tax-free gratuity after 5 or more years of service. There is a wide expectation that this figure would be increased to bring it in line with a tax-free payout of central government employees, which is Rs20 lakh.
Standard Deduction
Before 2006-07, there used to be a concept of the standard deduction for salaried taxpayers. It was meant for sundry expenses that an individual incurs in the course of employment on day to day basis but does not get reimbursed from the employer. Without giving any proof of expense, a fixed amount was allowed as deduction. This provision should be brought back for the benefit of salaried employees who are made to pay taxes on gross salary received.
Reduction of GST rates
There has been a rise in prices of certain products and services after GST was introduced. The general public would like to see cutting down on GST rates on insurance products, education, transportation and such other essential products and services that are used by people of all strata.
The budget 2018 is critical not only for common man but also for the government. It is completing four years in power and with various reforms already undertaken, public now wants some results in the form of easing of tax regimen which is one of the most complex and highest in the world.
Click here to get latest updates on Budget 2018
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