The Union Budget 2017, perhaps the most anticipated budget in the last few decades, is due on 1st February 2017 and the common man has great expectations from it. They stomached the chaos and cash crunch caused by the demonetisation drive on promises made by the Modi Government of better days ahead. If nothing else, the budget should introduce favourable tax reforms.
While we are all hoping for sweet deals in the form of lower taxes and other concessions, here is a list of general expectations from Finance Minister Arun Jaitley’s budget 2017.
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Higher Tax Slabs
The income tax slabs are the most sought out bit of the budget announcement as it directly impacts the earnings of the common man, particularly the salaried individuals. The expectation is of an upward revision in the tax slabs as fines on copious amounts of black money and higher revenue collected from the widespread implementation of the cashless system have filled the government coffers.
This might be dreamily optimistic, but a few people are expecting the income tax exemption limit to be raised to Rs. 4 lakhs from Rs. 2.5 lakhs. The least the Government can do is raise the bar to Rs. 3 lakhs. Expecting anything more can result in a heart-breaking experience. Likewise, people are expecting the 10 percent tax bracket threshold to be raised to Rs. 10 lakhs, 20 percent to Rs. 20 lakhs and 30 percent on everything above it.
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Lower Tax Rates
No one remembers when and who set the income tax rates. With great reforms sweeping over the country, people are expecting greater benefits. Salaried individuals, who always bear the brunt of higher taxes are hoping for better days via a reduction in the tax rates if not an upward revision in the tax slabs. The 30 percent tax rate on incomes of Rs. 10 lakhs and more is not working well for many as it takes away a sizeable chunk from their salaries. People are hoping for a scheme that’ll allow them to retain a good portion of their salaries without making a whole lot of investments.
According to media reports, which cites tax authorities, the Government has unearthed black money to the tune of Rs. 2,600 crore and seized about Rs. 393 crores, with the numbers rising. The Government treasury for sure is looking good now.
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More Relief On Home Loans Interest Payments
One of the biggest impacts of demonetisation was seen on the Real Estate sector. The logic is simple – the primary goal of the demonetisation drive was to crackdown on black money and real estate has traditionally been the parking spot for unaccounted cash. As a result, demand for residential properties is on a decline. In fact, according to International Rating Agency Fitch, demand for residential properties in the country is expected to dip 20-30 percent this year.
However, there is some good that has come out of all the chaos. Property rates have declined and so have the interest rates on Home Loans. But these benefits are tiny when compared to the marked up prices people pay for a house. The expectation from the budget is of higher tax reliefs on Home Loan interest payment. This could happen, as Prime Minister Modi is leaving no stone unturned to fulfill his promise of ‘a house for everyone by 2022.’ To this effect, the government has approved a 3 percent interest subsidy on Home Loans of Rs. 2 lakhs in rural areas.
At this time, when real estate investment sentiments are tepid, the government needs to provide good stimulus to boost activity in the sector. Growth in the real estate sector is crucial to a developing country like ours as it has a direct impact on the steel, cement, and logistic industries, which have a major influence on the gross domestic product (GDP) of the country. Moreover, the real estate sector provides large scale employment to unskilled and semi-skilled workers.
Keeping the following points in mind, experts are hoping, tax relief on Home Loan interest payment will be raised to Rs. 3 lakhs from Rs. 2 lakhs. Some are even going as far as expecting a complete deduction on interest paid on Home Loans. We have our fingers crossed.
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Affordable Health Insurance
Health Insurance costs are soaring yet they are a necessity burning a big hole in everyone’s pockets. Presently, individuals can claim deductions of up to Rs. 55,000 on Health Insurance premiums. Of this amount, Rs. 25,000 can be claimed for self, spouse and children and Rs. 25,000 for parents, and Rs. 30,000 if parents are senior citizens. This includes a maximum deduction of Rs. 5,000 on preventive medical expenses.
So, what’s the expectation from the budget on this front? Deduction on actual premium paid towards Health Insurance and removal of Rs. 5,000 cap on preventive healthcare expenses. If this happens it’ll definitely improve the health of many.
Improvements In Education And Childcare Expenses
Parents are always keen on getting their children admission in the best educational institutes. Some of them even go to the extent of cutting down on all others expenses to afford high tuition fees. In order to ease down the brunt off taxes on parents, a deduction of Rs. 1.5 lakh on tuition fees is permitted for two children per assesse.
Unfortunately, the tuition fee is only a small component of what parents spend on the education of their children. This cost is even higher where both parents are working and have to leave their children in expensive daycare centres. If the budget increases deductions on education and childcare expenses it’ll do a whole world of good to couples with children.
Higher Deduction When HRA Is Missing
Most companies provide house rent allowance (HRA) to their employees, which is an effective tax-saving tool. However, some companies do not make this offer. Salaried employees who do not receive HRA can claim a deduction of up to Rs. 5,000 per month under Section 80GG.
Until and unless you are willing to live with 10 other people in a pigeonhole on a road which is part dump yard and part sewer, you are not likely to find decent accommodation in that price range. People are hoping for this deduction to be raised to Rs. 10,000 per month. They can at least get a decent accommodation for that price in the suburbs, never mind the travelling hours and cost.
Miscellaneous Deductions
Other than the above mentioned deduction, there are other tax-exempted expenses like medical, conveyance, and meal allowances. The benefits provided on these expenses pale in comparison to the actual expense incurred. People are expecting more realistic benefits on these allowances.
With all the major expectations listed out, a wide expectation is simplification in the taxation process and a merging of fragmented deduction sections. Let us know in the comments section what your expectations are from the budget.
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