Middle Class-Salaried People Expectation from Union Budget 2019: Shetty also recommends the Centre to increase the tax exemption limit from Rs 2.5 lakh.
Union Budget 2019 Tax Benefits for Salaried, Middle Class: The Modi government’s final budget is an important one. As expectations from middle class, salaried employees are high as they are hoping the government will announce some income tax benefits for them. Despite being an interim budget, there is no hard and fast rule which stops the outgoing government from framing any new major policies or benefits. It is, therefore, widely hoped that the Modi government introduces changes that could help people save more and save better, Adhil Shetty , CEO of BankBazaar.com, said.
Talking about the income tax expectations for the middle class, Shetty said that currently the maximum tax exemption one can avail under Section 80C is Rs 1.5 lakh through investment in PPF, equity, provident fund etc. Considering the increase in income and inflation, this limit is relatively low, an increase in this limit to Rs 2-2.5 lakh would be very welcome and encourage more investment in financial assets, he said.
In Budget 2019, the Central government should consider increasing the tax deduction limit for housing loans, especially for buyers in metropolitan cities. A doubling of the current limit of Rs 2 lakh to Rs 4 lakh will be favourable to many borrowers, especially from cities like Mumbai, where most houses are priced at Rs 1 crore and above and the ticket sizes of the home loans are higher.
Shetty also recommended the Centre to increase the tax exemption limit from Rs 2.5 lakh in Budget 2019. The last budget had a reduced rate of income tax to 5 per cent from an erstwhile rate of 10 per cent in the income tax slab of 2.5 lakh per annum to 5 lakh per annum. There is a steep jump from 5 per cent to 20 per cent for income between Rs 5 lakh to Rs 10 lakh. Some rationalization is expected here, he said.
The Budget 2018 introduced an LTCG of 10 per cent on gains of over Rs 1,00,000 in a financial year. “We hope the government revisits this limit and revises it upwards to benefit a growing number of small investors,” Shetty said. The government could also explore a separate deduction for ELSS independent of 80C to encourage mutual fund investment.
Among other recommendations for Budget 2019, Shetty said that senior citizens are eligible for Rs 10,000 of tax exemption under Section 80TTA, which hasn’t been revised for many years. If this limit can be increased, it would mean much to their financial independence.
He also said that, currently, equity is the only mutual fund that qualifies for tax deduction under Section 80C. Asset classes such as debt funds and hybrid funds, which are the go-to investment instruments for conservative investors, are left outside the ambit of Section 80C. This Union Budget should include debt or hybrid funds under Section 80C, Shetty said.
“We expect the Budget 2019 to take up from where the last budget had left off. The last Budget speech announced the setting up of the Fintech Committee, created within MOF to look into the growth and development of the Indian fintech sector, and help ease regulations and boost entrepreneurship in the sector. We hope that this budget further strengthens the mandate of the Fintech Committee to make India the top Fintech innovation centre in the world by ensuring policy to fast track paperless and presence-less access to finance,” Shetty said. “We hope that this budget would also have initiatives aimed at driving digital adoption and awareness by creating customer incentives for online approvals of credit products similar to currently available online discounts for digital insurance policies,” Shetty said in his pre-Budget 2019 expectation.