The Modi government’s demonetization drive has hit the common man of this country hard. While lakhs of people have already become jobless, many more are on the verge of losing their jobs – particularly in small and medium-scale industries. And those who are lucky enough to survive job cuts, are still feeling the pain of note ban.
It goes without saying, thus, that the common man’s expectations from the Union Budget 2017 have gone up substantially as they are looking for some sops from the Finance Minister.
Here are some of the expectations of both men and women taxpayers from the budget:
Expectations of woman taxpayers:
1. Tax reliefs: Until FY2011-12, separate tax slabs prevailed for men and women. The slabs were higher for women tax payers by Rs 10,000. Considering demonetization was a radical event with its own share of implementation pains, all taxpayers including women would hope to have some tax reliefs. This could be in the form of higher slab limits overall for all category of taxpayers.
2. Income of a minor child: Income of a minor child is included in the total income of the parent with higher income unless the income accrues on account of manual work/ application of skill of the minor. With the amount of working mothers on the rise, currently a deduction of a meagre Rs 1500 per child per annum is available. “This limit has remained constant since its introduction from Finance Act 1992. On the other hand, the average expenditure to meet the cost of a minor’s education/ health/ living expenses has gone up considerably in recent years. To cover for rise in the cost of living, this limit may be increased to at least Rs 10,000 per annum for each minor child,” says Parizad Sirwalla, Partner and Head of Global Mobility Services, KPMG in India.
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3. Increase interest deduction limit on housing loan: Increasingly women being financially independent are looking at buying houses in their own names. Further, keeping in mind the higher interest rates levied by the financial institutions and rising prices of real estate, it is hoped that the upcoming budget should increase the interest deduction limit on housing loans from the existing Rs 2 lakh to at least Rs 3 lakh. The existing limit of Rs 2 lakh was enforced in the FY 2014-15.
4. Incentives for women entrepreneurs: The nation has witnessed a huge surge in the number of women entrepreneurs in recent years. They too have their expectations from the budget. “Women entrepreneurs would look forward to investment-linked incentives and further rationalisation of the start-up benefits that were introduced by last year’s Finance Act. Women professionals are also likely to welcome measures to boost savings and consumption,” says Radhika Jain, Director, Grant Thornton Advisory Private Limited.
Expectations of all category of taxpayers:
5. Income tax relief to the common man
Industry experts are hoping that some tax reliefs may be given to the common man to soothe the cash ban pain. In their opinion
* The base slab for income tax exemption could be increased from the current Rs 2.5 lakh.
* A restructuring of tax slabs could also be explored – currently, 10% tax is charged on annual income of Rs 2.5 lakh to Rs 5 lakh, 20% on Rs 5 lakh to Rs 10 lakh and 30% on income above Rs 10 lakh. The first two slabs at least can be widened or taxed at a lower rate.
* Deduction under Section 80C of the I-T Act (i.e. deductions on investment and on specific instruments like PPF) should be enhanced.
6. Standard Deduction
A standard deduction was allowed to salaried tax payers uptill 2005. However, the same was later removed. Restoring the standard deduction is a long outstanding demand that would help achieve parity between the taxable income of a salary income recipient vis-à-vis a professional/ business income recipient as unlike self-employed individuals, salaried people enjoy only a few tax-free allowances. Therefore, a majority of tax experts believe that standard deduction should be introduced again and the amount should be fixed at Rs 50,000 at least.
7. Increase in deduction for insurance premium
The deduction under 80D is currently capped at Rs. 25,000 for self, spouse and dependent children. An additional deduction of Rs. 25,000 is available for parents and Rs. 30,000 if they are senior citizen parents. Hence the total deduction available under this section can go up to Rs. 55,000. A deduction for preventive medical expenses is also available up to Rs. 5,000 spent as a part of the overall deduction. According to experts, a deduction for the actual expenses made in this regard on medical insurance premiums will be a welcome move since insurance premiums are very high, especially when it comes to parents.
8. Increase in transportation allowance
The transportation allowance granted by the employer to his employee for commuting between the place of work and residence is tax-free to the extent of Rs. 1600 per month. This limit however is still inadequate and definitely needs to be revised upwards to at least Rs. 3,000 per month, given the rising commuting costs across the country.