Budget 2016: Income Tax Expectations From Arun Jaitley
Finance Minister Arun Jaitley will present the Budget for 2016-17 on February 29. The salaried class has a lot of expectations from the Budget. Increase in the personal income tax exemption limit and a higher deduction limit on home loan interest are among the common ones, say analysts.
The salaried class also wants the deduction limit under Section 80C to be raised further, say experts.
Currently, Section 80C is too cluttered, say experts, with a large number of instruments qualifying for deduction under the section. Employee Provident Fund, which is a mandatory contribution for a salaried person, is also eligible for deduction under the section, consuming a major portion of the Rs. 1.5 lakh limit. Therefore, people especially in the higher income group are unable to claim deductions for other 80C-linked investments.
Experts also feel that the infrastructure bonds should be reintroduced, both to provide an extra deduction to the salaried class and help the government raise funds for infrastructure projects.
“To encourage savings for infrastructure development, the infrastructure bonds may be reintroduced with a sub-limit of Rs. 25,000,” says Anil Rego, CEO and founder of Right Horizons.
Also, given the high property prices, the deduction for the home loan interest part under Section 24B part should be raised further, experts say.
“The current limit of Rs. 2 lakh is low considering the costs involved in cities like Mumbai, where the houses are priced at a crore and above,” says Ms Malhotra of Nangia & Co.
The huge delays by the builders in giving possession are adding to the cost of buying a property further. Therefore, experts believe that the government should relax the rules related to home loan interest exemption.
As per the current income-tax rule under Section 24B, the buyer can claim the deduction on the entire interest paid during the construction period in five equal installments only after the completion of the construction of the property. It further says that if the construction of the property is not complete within three years, the borrower can claim only claim Rs. 30,000 per year of the pre-construction interest. The government should relax the norms, say experts.
Also, there are certain sections whose deduction limits have not been revised for a long time and are far below the actual cost that people incur. These needs to be increased, believes experts.
“Medical allowance of Rs. 15,000 per annum, education allowance of Rs. 100 per month per child and hostel allowance of Rs. 300 per month per child are too low considering the actual costs involved and have not been revised for a very long time, ” says Ms Malhotra.
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Source:Ndtv
