Budget 2018: Salaried employees eagerly wait for the Union Budget in hope to get some Income Tax relief from the government. The salaried employees are allowed a number of deductions as prescribed in the law. However, no deductions are allowed on account of any expenses incurred during the course of the employment other than profession tax on employment. There are various expenses that the employees incur during the course of employment which they cannot claim as a deduction. At the same time, the few exemptions that are available to them under section 10 are subject to upper limits which have been fixed several years back and virtually serve no purpose on account of inflation.
In its memorandum for Budget 2018, Institute of Chartered Accountants of India has pointed out that employees during the course of their employment incur various expenses, including for upgrading skill, for rendering their services as employees. ICAI says that deduction for such expenses should be allowed under the law.
Budget 2018: 5 Blockbuster Income Tax Moves Common Man Can Expect
“For avoiding leakage of revenue if any such deduction may be a fixed sum or certain percentage of salary, say 25% of the salary, but maximum may be restricted upto say Rs. 5,00,000/- ,” ICAI recommeds in it pre-budget memorandum for Budget 2018. The ICAI has recommended that doing away with the multiple exemptions will help in cleaning up the Act and removing unwieldy provisions.
Currently, the Income Tax is calculated at the rate of 5%, 20% and 30%:
The Income Slab Tax Rate
Income from Rs 2,50,000 – Rs 5,00,000 5%
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
Last year, Finance Minister Arun Jaitley had cut the tax rate for individuals in the lowest tax bracket – Rs 2.5 lakh to Rs 5 lakh – to 5 percent from 10 percent. Along with that, Jaitley had cut the existing rebate under Section 87A of the Income-tax Act, 1961 to Rs 2,500 from Rs 5,000 for those earning between Rs 2.5 lakh and Rs 3.5 lakh. Budget 2018 will be the last regular budget Modi-led NDA government before general elections 2019. Some reports have said that Government is likely to raise non-taxable slab from Rs 2,50,000 to Rs 3,00,000.
Another such much-expected sops is standard deduction. However, it is difficult to say if the standard deduction will be reintroduced by FM Arun Jaitley through the Budget 2018. However, a majority of people, including tax experts, believe that to bring in parity between individuals carrying on business and those in employment, there is need for reintroduction of erstwhile standard deduction in India, which will result in more money inflow to the common man. And this should be done in the Union Budget 2018.