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Taxpayers hope high on sops in Union Budget 2019
With the introduction of Goods and Services Tax (GST), the Budget wish-list seems to turn rhetoric and we are having two such instances in the same year; one during the interim budget and now for the full-fledged one, which applies for the remaining part of this year.
Hyderabad: With the introduction of Goods and Services Tax (GST), the Budget wish-list seems to turn rhetoric and we are having two such instances in the same year; one during the interim budget and now for the full-fledged one, which applies for the remaining part of this year.
However, direct tax payers could always present their side of the expectations in the run-up to the budget. With the retention of the earlier govt. the possibility of continuity is high and so are the hopes of the commoners.
Tax rates: The basic tax slab has been increased by Rs 50,000 by this govt. during their initial innings of 2014.
The interim budget has retained the tax slabs, however, proposed a rebate of Rs 12,500 for the individuals with incomes up to Rs 5 lakh under section 87A.
The budget could, though, look to rationalize the tax rate at which the next category is being taxed. For the next slab rate jumps from 5 per cent to 20 per cent and 30 per cent thereafter.
Standard Deduction: In the interim budget, the then Finance Minister, has increased the limit from Rs 40,000 to Rs 50,000.
Also, this limit was made available for pensioners bringing a huge relief for this category of individuals. Anticipating further tweak seems unrealistic in this space.
One has to note that this limit has come in for the replacement of medical reimbursement and transport allowance received from the employer, so was applicable only for employees.
This head was reintroduced in 2018 and prior to that before it was removed in 2004, the limit was lower of Rs 30,000 or 40 per cent of the income for individuals earning between Rs 75,000 and Rs 500,000 while a straight deduction of Rs 20,000 over 5 lakh earnings.
As the feature is a replacement of employee-employer benefits, this head wouldn't cover professionals and non-employees.
Deduction in VI A: Probably the biggest expectations for years was the revision of the overall amount that could be used for claiming this benefit.
It currently stands at Rs 150,000 per annum for 80(C) which is crammed up with many useful instruments that including children's turion fee, provident fund contributions, housing loan principle repayment and life insurance premiums.
Moreover, the investment options in this provision are skewed with debt-oriented excepting for Equity Linked Savings Scheme (ELSS) and a bit of an option through unit linked insurance plans (ULIP).
The idea of expense related savings like that of the children's tuition fees could be moved out of this section or allow them to be fit in with a sub-section by increasing the limit.
With the provident fund trust itself investing part of their incremental contributions into equities, the limit could be increased to accommodate a retirement specific product with an equity bent would benefit the individuals also.
(The author is a co-founder of "Wealocity", a wealth management firm and could be reached at [email protected])
