Budget 2018: Finance Minister Arun Jaitley will present the Union Budget 2018 in Parliament. Union Budget 2018 expectations are increasing day by day. In the Union Budget 2018, the Modi government will look to address a few issues.
Budget 2018: The Modi government’s fifth budget will be presented on February 1. Finance Minister Arun Jaitley will present the Union Budget 2018 in Parliament. Budget 2018 expectations are increasing day by day. In the Union Budget 2018, the Modi government will look to address a few issues. One of those issues will be Income Tax-related ones for the salaried class, according to PwC India.
The Modi government can simplify the salary provision be simplified in Budget 2018. In the Union Budget, the BJP-led NDA government can remove many of the historic allowances which are exempt under the Act which has very nominal amounts which are incomparable with today’s costs. For example, the medical reimbursement exemption of Rs.15,000 per year or children education allowance at Rs.100 per month needs to be relooked into. The Modi government can provide norms on a simple salary structure having basic salary and house rent allowance and provide deductions on actual expenditure or based on the dependents in the family or in the alternate, provide a reasonable blanket standard deduction at 35% of salary income which will reduce the administrative burden on the Companies as well to collect documentary evidences for each of the exemptions as per the existing provisions of the Act.
In Budget 2018, the Modi government may relook into the salary taxation by making the salary structure simple and provide deductions on expenses which would be in line with the actual expenditure incurred by the individual which will bring relief to the salaried class. If the government removes all the existing allowance based exemptions and provides standard deductions based on individual circumstances/marital status/dependents, this will also simplify the employer compliance burden such as currently collecting documentary evidences for providing exemptions on house rent allowance, leave travel allowance, medical reimbursement, etc.
Watch: Budget 2018: 5 blockbuster income tax moves common man can expect
It is an expectation that the salary structure is simplified and provide relief to the salaried class in Budget 2018. However, bringing tax relief additionally is something we have to wait and watch given that Hon’ble Finance minister has to maintain a balance between fiscal deficit, mobilize resources for infrastructure development and provide tax reliefs to the salaried class. Having mentioned this, based on budget 2017 speech, one can be optimistic that FM Jaitley will provide some tax reliefs to the salaried class.
By Anand Dhelia Partner – Personal Tax, PwC India. Santhosh S Associate Director – Personal Tax also contributed to this article.