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Thursday, January 26, 2017

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Five Expectations from Union Budget 2017 by a salaried individual

Again that time of the year has come when the common man, the salaried person looks out to what’s in store for them – concessions, rebates. The Union Budget for the next fiscal shall be announced early this year on February 1, 2017.

Union Budget 2017, Budget 2017
Five Expectations from Union Budget 2017 by a salaried individual
Again that time of the year has come when the common man, the salaried person looks out to what’s in store for them – concessions, rebates. The Union Budget for the next fiscal shall be announced early this year on February 1, 2017.

People at large are expecting that either tax benefits for individual taxpayers be substantially increased or instead of a plethora of deductions, one ad-hoc benefit like the erstwhile standard deduction be introduced.  This would simplify tax computation, reduce administrative burden and curtail unnecessary litigation associated with these tax concessions.

Below are the few points or wish list from the Budget for the salaried class:


1. Tax slab rates should be revised upwards and minimum limit for taxable income be raised

There should be some upward revision in the income-tax slabs, the general expectation being exemption limit to be raised to INR 4 lakh (from INR 2.50 lakh per annum at present), while the subsequent slabs can be as follows:

Consequent changes could also be forthcoming for senior citizens (60 years) to INR 500,000 and INR 600,000 for super senior citizens (80 years and above). If implemented, this will help alleviate the common man’s sufferings to some extent.


2. Allow higher deduction for interest paid on housing loan

The real estate sector is one of the key growth engines for a developing economy like India. It provides large-scale employment to unskilled and semi-skilled workers in the country, which is a need of the hour, to boost employment opportunities for a large scale population.   “Keeping in view the government’s agenda of providing housing for all, it is imperative that tax concessions such as increasing the tax deduction for interest paid on housing loan from INR 2 lakh to INR 3 lakh be considered. This will also provide an immediate market to the banking services sector for investing their fund's post demonetization windfall.

3. Raise limit on allowances

Salaried employees are eligible to claim exemptions/deductions like medical reimbursement, conveyable allowance, meal allowances, travel allowance etc.  These exemptions/deductions were fixed a long time ago. In reality, employees incur much more expenses of this nature and thus the tax benefit obtained is very little. There is need to re-look at these small concessions and align them with the current economic reality.

4. More incentives for NPS Investment

India is an economy where saving for old age or retirement continues to be encouraged and is also important in view of the lack of Government’s financial support like in other parts of the world. Therefore, taxpayers should be provided with more incentives for investing in the National Pension System (NPS). Contribution to NPS can also be brought on par with the Employees Provident Fund or Public Provident Fund with respect to the exemption of 100 per cent of the accumulated balance on withdrawal, subject to certain conditions.


5. Deductions under Section 80C:

The deduction limit under Section 80C of the Income-tax Act should be increased to say INR 250,000 from the current INR 150,000.  This will allow individual tax payers to have more tax benefits as well as the Government to use that money for growth avenues such as infrastructure development.


After the historic announcement of demonetization on November 8, 2016, the, common man is now is looking forward to the Finance Minister (FM) presenting the Union Budget 2017 for a simple and straight forward tax structure for individuals.

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