It’s time again we start anticipating as an ‘Aam Aadmi’ what’s in for us in the upcoming Budget. Finance Minister Arun Jaitley would unveil the Budget 2018 on the 1st February 2018. Sensing the expectations and to converse the same to the government, many forums, institutes, industry representatives etc. have submitted their pre-budget memorandum to the government, with the hope that expectations will get converted into reality.
Various forums have suggested to widen the individual taxpayers base, i.e. no taxes for income up to Rs 3 lakh, income between Rs 3 lakh and Rs10 lakh to be taxed @ 5%, Rs 10-20 lakh @ 20% and income above Rs 20 lakh @ 30% with a vision to entail greater relief to small taxpayers and moderately higher rates for taxpayers falling in the higher bracket income. Keeping in view the inflationary trends in the economy, this suggestion is imperative, leaving more disposable incomes in the hands of individual tax payers. Though this may lead to substantial fall in the revenue collection for the government due to reduced taxes, however this deficit can be recovered by launching tax-saving investment schemes, leading to more disposable income available in the hands of government.
Currently under domestic tax laws, tax deduction for contributions in life insurance, PPF etc. cumulatively is Rs 1.5 lakh. As a common man, we want to adequately insure our life and our family members by buying term plans at low premium costs. A detached exemption limit for premiums paid towards term insurance would be a great relief than including within the bracket exemption limit.
The limit of medical reimbursement of Rs 15,000 is completely obsolete and impracticable to the expenses actually incurred by an individual on medical expenditures. This limit needs an immediate look through to sufficiently match up with the actual expenditure incurred in today’s time. With the upcoming Budget 2018, one can hope that this limit is fixed closer to the reality.
As prudent Indians, one of our preferred mode of investment is fixed deposit as it’s risk-free, safe and reliable. However, considering the current trends of bank interest rates on such deposits which are significantly low, somewhere close to 6.75 to 7% per annum, the post-tax deduction interest earned can hardly beat the inflation or create any wealth to an individual. Hence, deduction on fixed deposit interest up to Rs 25,000 in addition to the existing interest on savings account may bring some relief to tax payers.
Further as a measure to ease compliances, the government should bring in a single Income-Tax Return form (ITR form) for all types of assessees and income. It is suggested that the common fields in all ITR can be clubbed and income under the various heads of income is restricted in the forms of Annexure. The taxpayer should click and fill only the annexure which is relevant for him. This would remove the complexities prevailing around as to which ITR form should be used for which source of income.
All changes in favor of the taxpayer would definitely result in enhancing purchasing power, improvement in quality life, growth in GDP, increased savings for government plans like Jan Dhan Yojana, Beti Bachao Beti Padhao Yojna, better education, growth of Make in India movement, etc. India has to go far way on development path and there should be more defined, balanced and calculated methodologies to structure it.
The country as a whole is highly obsessed about the Budget 2018 and is waiting for a miraculous Union Budget that would fulfill the hopes of all.
(By Akhil Chandna, Director, Grant Thornton India LLP, with inputs from CA Ridhi Sanghvi)