Budget 2017: Major expectations from Finance Minister Arun Jaitley

Be it tax exemption, hiking the transport allowances, increasing the rebate cap on home loans, giving subsidies to farmers or addressing the issue of women’s and senior citizens’ taxation, the decision of the Finance Minister will be closely watched by one and all.

Here are the major expectations:
1) Expectations of salaried class

Here are some changes the salaried classes expect in this year’s Budget.

The common man expects the income tax limit to be increased from prevailing Rs 250,000 to Rs 400,000. 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 5 lakh.

Currently, the peak tax rate of 30% is made applicable over an income of Rs 10 lakhs for individual taxpayers. However, the income level on which peak rate is applied in other countries is significantly higher. Hence, there is a need for further raising the income level on which the peak tax rate would trigger, to make the same compatible with the international standards.

Here are the expected revised tax slabs for individual taxpayers.

Upto Rs 4 lakhs -Nil

Rs 5-10 lakhs- 10%

Rs 10-20 lakhs- 20%

Beyond Rs 20 lakhs -30%

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. 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.

Hiking the cap on interest on home loan

We have great expectations from this budget, starting with support to incentivize affordable housing and permit higher tax exemption limits on interest and principal repayments for home buyers.

The deduction for interest on housing loans needs to increase from the current limit of Rs 2,00,000 considering the significant rise in rates for residential properties over the past few years. To provide relief to the tax payer this limit should be increased to at least Rs 3 lakh. This will give impetus to the housing industry, thus boosting the economy in the long run.

2) Expectations of home buyers
The deduction available under section 24 of the Act is to a maximum limit of Rs 2,00,000/- for interest on loan taken for acquisition/construction of self-occupied house property. Given the rising interest rates and the increase in property prices and also to spur the demand for housing, it is recommended the exemption should be increased to at least Rs 3,00,000/- per annum.

In the case of home loan repayments, the ceiling under tax benefits is capped at Rs 1,50,000/- for principal paid, which is very less, particularly when home loan principal repayments are clubbed with other tax saving instruments.

Therefore, the deduction for principal repayment should be considered for a separate/standalone tax exemption, rather than being clubbed under Section 80C of the Act.

3) Expectations of retail investors
Deduction in respect of Rajiv Gandhi Equity Savings Scheme: The Rajiv Gandhi Equity Savings Scheme (RGESS) is a tax saving scheme that was announced in the 2012-13 Union Budget aimed at first time retail investors. The scheme is aimed at encouraging the flow of savings of small investors in the domestic capital market, and presents investors with tax benefits provisioned under a new section, 80CCG in the Income Tax Act, 1961. It is recommended to raise the income ceiling to Rs 25 lakh as compared to Rs 12 lakh at present.

To attract new investors into the equity markets, RGESS needs to be simplified and the entry gates should be widened. Also, the Association of mutual funds in India (Amfi) made a proposal to extend the tax benefits available under RGESS to all equity fund investors.

Also, all open-ended equity and balanced funds should be RGESS compliant schemes. Application forms should have the option “RGESS”.

Taxation of National Pension Scheme

In order to encourage taxpayers to make voluntary higher contributions towards NPS, it should be made more tax-friendly as the objective of this scheme is to create a pensionable society. Accordingly, the tax regime of NPS should be made Exempt, Exempt, Exempt (EEE) from the current EET regime on the lines of other retirement schemes like Employee Provident Fund and Public Provident Fund.

Without prejudice to above, the benefit of 40% exemption for withdrawal from National Pension Scheme (NPS) by any employee be extended to withdrawals by any person and not just employees. It is suggested the sub-section (12A) of section 10 of the Act providing for exemption of 40% of payment from NPS Trust to “an employee” on closure of account or opting out of pension scheme, may be modified to allow such exemption to payment from the NPS Trust to “an individual”, since exemption under the said clause is available in respect of withdrawals from NPS by self-employed individuals also.

4) Expectations of Housewives
– The housewives expect government to come up with good measures to keep the ever increasing inflation in check.

– The price of kitchen supply has shot up in the past decade. The housewives expect that the finance minister will bring measures to reduce them.

– There is also expectation that price of gold, which has shown considerable rise in last few years comes down. Though gold is a good hedge for crisis, housewives expect that the price should come down so that they can buy more.

– The constant demand to keep Petrol and diesel rates under reasonable limits is also one of the major expectations of the housewives. Although it is also true that with fuel deregulation, there is nothing much that can be done.

5) Expectations of senior citizens
Tax Exemption Limit

Senior citizens expect that more room should be given for them in tax rebate. An increase in the exemption limit for the senior citizens (above 60 years), which currently stands at Rs 300,000 to at least Rs 500,000 would give a boost to their retirement funds.

Similarly, very senior citizens (above 80 years) who do not come under tax bracket for earnings up to Rs 5 lakh are also expecting a further increase in the exemption limit.

Reimbursement of Medical Expenditure

Any sum paid by the employer in respect of any expenditure incurred by the employee on the medical treatment of self/ family is currently exempt from tax, to the extent of Rs 15,000 per annum. The exemption in respect of expenditure on medical reimbursements/ hospitalization expenditure in approved hospitals should also be extended to retired employees.

6)Expectations of students
Students are pinning their hopes high on the Union Budget for 2017-18 and expecting that exemptions against education loans can be extended to 10 years from the currently allowed 8 years.

They hope that there will be no further rise in service tax otherwise educational institutions will increase their fees.

To make domestic higher education more affordable, the government must take adequate steps to decrease education loan rates across the board.

Another area needs the attention of the finance ministry. Focus of government must be on issues like hostel fees, which should be decreased, and number of seats, which should be increased in universities.

But most of all, the number of govt universities must be increased to cater to the rising number of students seeking higher education.

Budget 2017 is an opportunity for the government to concentrate on improving school education for over 260.5 million children who enrolled in elementary and secondary school in 2015-16 — children who will form the core of Indias working-age population, one billion by 2030, the largest in the world, Pratham, an education nonprofit has said.

The school education and literacy budget increased 3.2 percent in 2016-17, compared to the 2015-16 revised budget estimates.

Along with increasing the amount spent on education, the budget also needs to be restructured to focus on learning outcomes, and monitoring of quality.

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Source:Zee news

Finance Minister Of India