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HomeSalaries And PensionsHow budget 2017 may help salaried people wallets

How budget 2017 may help salaried people wallets

New Delhi: The salaried people have big expectations from Budget 2017, especially after it had to bear a lot of difficulties due to demonetisation.

Arun Jaitley
FM Arun Jaitley can benefit the salaried people in the Budget in several ways.

Finance Minister Arun Jaitley can benefit the salaried people in the Budget in several ways. These will not be mere handouts to please the salaried people. Tax incentives to the salaried people turn into savings, get invested and fuel growth.

Raising the Income Tax exemption limit

The salaried people expects the income tax limit to be increased from prevailing Rs 250,000 to Rs 300,000. This would help salaried people save a little. Additionally, increase in tax limit will kickstart savings which will ultimately lead to increase in investment and liquidity in the system.

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 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 health insurance premium/hiking annual medical insurance cap

Section 80D allows aggregate deduction of up to Rs 25,000 in respect of payment of health insurance premium and payment made on account of preventive health check-up. The Section 80D offers deductions over and above the exemptions derived from the more popular Section 80C. 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.

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.

This limit was last revised long back and needs to be revisited in light of the rising medical and hospitalization costs especially for private hospitals.

The current tax exemption limit of Rs 15,000 per annum needs to be increased to at least Rs 30,000 per annum.

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 20,000 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 to Rs 30,000 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 1,600 per month. This limit needs to be revised upwards to at least Rs 3,200 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 exemption limit was fixed in the year 2000 with retrospective effect from 1 August 1997 and seems extremely minimal considering the burgeoning cost of education. This should see a change of up to a minimum of Rs 500.

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 2.5 lakh. This will give impetus to the housing industry, thus boosting the economy in the long run.

Payment of principal amount on home loan

There is a demand from a wider section that a separate provision should be made for the principal loan amount which is currently included in 80C (under which maximum limit is Rs 1.5 lakh (all inclusive)).

TST
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