Ajeet Kumar
With just few weeks remaining for the Finance Minister to present the Union Budget for 2015, the common man has started building up expectations from the Narendra Modi-led NDA government at the Centre.
But the common man, who has nothing to do with the nitty-gritty of the very volatile and evolving business world, hopes to see the net effect of the strong measures taken by the government on inflation, education, taxation, and affordable housing etc.
Here are some changes that the Salaried classes expect in this year’s Budget that would benefit a common man.
Raising the Income Tax exemption limit
The common man expects the income tax limit to be increased from prevailing Rs 250,000 to Rs 300,000. This would help people save more. Additionally, increase in tax limit will kickstart savings which will ultimately lead to increase in investment and liquidity in the system.
The working women’s contribution to the national economy is also increasing slowly but steadily. As an incentive, tax exemption for them too needs to be raised to at least Rs 4 lakh.
Deduction under Section 80C
At present consolidated deduction of Rs 1.5 lakh is allowed on all long term and short term serving instruments, including provident fund, pension funds, and equity linked savings scheme etc.
Exemption limits of allowances such as children education allowance, transport allowance, medical allowance etc are very low in the current financial situation, having been fixed a long time back, when inflation was not this high. So expectations are that the allowances exempted from tax are increased along with rise in exemption limits under Sections 80C from the present Rs 1.5 lakh to at least Rs 2.5 lakh.
Deduction in respect of payment of premium under life insurance policies
Section 80C allows deduction up to Rs 1.5 lakh in respect of payment of premium under life insurance policies and for other specified payments. The other specified payments include amounts invested in mutual funds, bank deposits, payments towards tuition fees etc. The government should provide a separate deduction limit of Rs 1 lakh for investment in various life insurance products.
Deduction in respect of amount paid under pension/annuity plans
As per section 80CCE, the overall ceiling for deduction is Rs 1.5 lakh for the payments covered by section 80C, payment towards annuity plans covered by section 80CCC and payment towards NPS covered by section 80CCD.
It is suggested to provide for a separate deduction limit of Rs 1 lakh paid to pension funds.
Deduction in respect of health insurance premium/hiking annual medical insurance cap
Section 80D allows aggregate deduction of up to Rs 15,000 in respect of payment of health insurance premium and payment made on account of preventive health check-up. With the steep increase in the cost of medicines and routine medical check-ups, expectations are high for the limit to be increased to Rs 50,000 to further encourage the spread and coverage of health insurance.
Hiking the cap on interest of bank savings A/c (Deduction on Interest earned on savings bank account)
Section 80TTA was introduced in Assessment Year 2013-14 to promote savings by providing for deduction on interest income earned on savings bank account. Currently deduction can be availed up to maximum of Rs 10,000. The government should increase the scope of the Section to include interest earned on time deposits and increase the deduction limit to Rs 25,000 per year.
Deduction in respect of investment in Infrastructure bonds
Deduction under Section 80CCF of the Act should be restored with an increased investment limit in infrastructure bonds from Rs 20,000 (allowed earlier) to Rs 50,000 for individual / HUF to boost infrastructure development.
Raising transport allowances
The transportation allowances granted by the employer to his/her employees for commuting between the place of work and residence is tax-free to the extent of Rs 800 per month. This limit was fixed more than a decade ago, and needs to be revised upwards to at least Rs 3,000 per month, given the rising commuting costs.
Children education allowance
The education sector in India is growing at a phenomenal rate but it still needs significant attention, support and backing. Education allowance is currently exempted up to Rs 100 per month per child for a maximum of 2 children. This should see a change of up to a minimum of Rs 1,000.
