INDIA BUDGET 2017: EXPECTATION OF TAX BENEFITS TO INDIVIDUALS
Expectation from the Budget is to enhance the Take home earnings of individual taxpayers which could amplify their savings, Investment and expenditure. Irrespective of the tax planning advices given by their Chartered Accountants, the individual tax payers are unable to reduce their tax burden in the current tax law. So, the expectations are mounting…
De-monetisation has taken the toll of patience on the common man. It is the right time he should be compensated with tax sops. Re-orienting tax slabs is a necessity. The existing basic exemption limit of Rs 250,000 is too less as compared to various other countries in the world. Further the current tax slab providing for the maximum rate of 30 per cent levied on income exceeding Rs 10 lakh is also on the higher side. Thus, the maximum rate of 30 per cent should be reduced and slab of Rs 10 lakh on which such maximum rate is levied should also be revised upwards.
Prime Minister has the mission of ‘Housing for All by 2022’. In order to boost the pace of the mission the Budget should increase the maximum limit of deduction for interest on housing loan in case of a self-occupied house property from the existing limit of Rs 200,000. Deduction is available from the year in which property is acquired/ constructed. Interest for pre-construction period is allowed as deduction over a period of five years starting from the year in which property is acquired/ constructed. The expectation of a home buyer is that the deduction for such interest on housing loans should be allowed from the year in which interest is paid irrespective of the completion of actual construction.
The deduction for the repayment of the principal part of home loans is clubbed under section 80C and maximum deduction available under this section is capped at Rs 150,000. Such a deduction for principal repayment could be allowed on a standalone basis and should ideally not be clubbed with section 80C.
Tax Saving Investments
The deduction under section 80C is currently limited to Rs 150,000. However, too many payments are clubbed in the limit of Rs 150,000. Tax sops should be relatable to the income of the individuals and the limits may be linked to the earnings. Each individual then, based on his earning capacity, life style and appetite to tax can decide the tax saving investments. More investments can be directed towards Infrastructure funding requirements of the Government which promotes nation buidling.
In the midst of hovering Medical costs in India and in the backdrop of miniscule Tax free medical reimbursements currently capped at Rs 15,000 per annum, the limit should be made more realistic and should sync with current requirements.
Education for children features high on the priority list of parents. An education allowance of Rs 100 per month per child upto two children currently available could be revamped considering the mounting education costs these days. The deduction for tuition fees of children available under section 80C of the Income-tax Act is a small tax saver now.