Budget 2018: As the Union Budget 2018 is going to be presented soon by Finance Minister Arun Jaitley, a straightforward anticipation is lowering of taxes which will increase the net disposable income in the hands of individuals.
Budget 2018: As we get closer to the unveiling of the Union Budget 2018 by Finance Minister Arun Jaitley, a straightforward anticipation is lowering of taxes which will increase the net disposable income in the hands of individuals. In this context, let’s take a look at some of the salaried man’s expectations from the forthcoming Budget 2018.
There are various allowances included as part of the compensation structure of an employee’s salary package which are fully tax exempt, while others are exempt up to certain limits. However, in case of such allowances, the limits for exemption were adopted decades ago and have no sync with the current scenario. Here are some allowances which require a relook in the Union Budget 2018, considering the ground realities like the cost of living and inflation:
1. Children education allowance and children hostel allowance
Currently these allowances are exempt in the hands of the employees to the extent of Rs 100 per month and Rs 300 per child for a maximum of two children, which provides total exemption up to Rs 1,200 and Rs 3,600 per child. However, considering the cost of today’s education programs, this amount is way below and there is an immediate need for revision in this amounts to up to Rs 3,000 to Rs 5,000 per month per child so that the expenditure incurred can be fairly adjusted with the tax benefit.
2. Exemption on conveyance Allowance
This allowance was raised from an erstwhile amount of Rs 800 to Rs1,600 in the Budget 2015. However, this amount is far from reality of the actual conveyance expenditure incurred by an individual even for short-distance trips. An amount of Rs 3,000 per month may be a reasonable amount of tax exemption expected in the Union Budget 2018.
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3. Leave travel allowance
This is exempt in the hands of employees twice in a block of four calendar years. The exemption is available to the employee for taking up a trip in India on own or along with family while being on leave. Considering the fact that employees are encouraged to take leisure time off from their work place to spend time with families and emergent interest of people in travel, this exemption should not be limited for 2 times in a 4-year block; instead be allowed each year. Further, the benefit should not be restricted to travel within India, but also be extended to foreign holidays. This would be a significant tax advantage that can be considered by FM Arun Jaitley in the Budget 2018.
4. Medical reimbursements
An increase in the annual limit of tax exemption of medical reimbursements from Rs 15,000 fixed a couples of decades ago needs a reconsideration in view of the actual expenditure incurred by employees.
These are some of the allowances for which a salaried class employee is expected to get some tax relief almost in every Union Budget, so that he could have a better living through higher net income.
(By Akhil Chandna, Director, Grant Thornton LLP, with inputs from CA Ridhi Sanghvi)