Budget 2016: 10 Income Tax Expectations From Arun Jaitley Today
Budget 2016 is expected to woo tax payers with some relief, despite challenges on the fiscal front. Finance Minister Arun Jaitley had announced incremental tax benefits for common taxpayers in his previous two budgets, raising expectations of more tax sops on Monday. Analysts say income tax exemption limit may be hiked to boost consumption and more tax deductions should be announced to incentivize savings.
Here are some income tax changes that experts expect in the budget:
1) The basic income tax exemption limit should be raised from Rs. 2.5 lakh and it should be linked to inflation and thereafter raised automatically every year. (Read)
2) The current deduction limit of Rs. 2 lakh on home loan interest paid during a financial year is too low because of spiraling property prices and should be raised.
3) A separate section for deduction on the principal paid on home loan should be introduced. Home loan principal repayment deduction is currently clubbed with other options under Section 80C, which has a ceiling of Rs. 1.50 lakh.
4) Home buyers can currently avail home loan interest deduction only after the completion of construction of property. In case construction is not complete within 3 years, the deduction is reduced to Rs. 30,000 per year from Rs. 2 lakh under current norms. This needs to be changed, given widespread construction delays.
5) The limit of Section 80C of Rs. 1.5 lakh should be raised and linked to the income-level of tax payers as some of the compulsory contributions like employee provident fund leave very little scope for other investments for people falling in highest tax bracket.
6) Medical allowance limit of Rs. 15,000 per annum should be raised given the high cost of medical treatment these days.
7) Children education allowance of just Rs. 100 per month per child should be revised to a realistic level.
8) The travel allowance, which was raised to Rs. 1,600 per month from Rs. 800 in last year’s budget, should be raised further.
9) Tax deducted at source (TDS) for bank fixed deposits should be cut to 5 per cent from current 10 per cent. Currently, TDS is deducted in case the interest on bank deposits (both fixed and recurring) exceeds Rs. 10,000 in a financial year.
10) The New Pension Scheme (NPS) should be made tax-exempt on withdrawal on the lines of other investments like PPF, insurance policies etc.
Source : NDTV