Tax, affordable housing sops top Budget wish list

Despite an annual ritual in nature, the expectations for the Union Budget remains at the same higher pitch. Though it’s just a display of balance sheet and projections for the next year, the limelight will be on the small changes that could possibly continue for the coming years especially in the tax treatment of individuals and the various tax saving opportunities. If we are asked to spell out our wish list of budget expectations, here it is.

Increase the limit of tax saving: The current Rs 1.5 lakh on the savings from section 80(C) has proven to be insufficient with the increased awareness towards retirement planning and due to clubbing of multiple saving opportunities into one section. An increase to Rs 2 Lakh is on the top of the list for the savers.

Taxable limit: The other contender for the top-of-the list honour is the overall tax set-off limit and the various breakups in the tax treatment of income. A few years back, when the Direct Tax Code (DTC) was discussed, the non-taxable limits were increased by multiple times from the current levels, while the tax treatment was moved to tax-all mode at maturity. May be small steps towards that could enhance the surplus capacity for the individuals.

Capital Gains Tax: There’s been news of tweaking in the long-term capital gains taxation on the capital markets particularly of equity. The news had mixed reviews and denial from the finance ministry. But, any introduction of it with limitations would be better than an overall taxation. The announcement could however rattle the capital markets.

NPS: It’s high time the National Pension Savings (NPS) scheme to be revived. Though, some flexibility was brought in, the hitches still remain, and the penetration is still low. The additional tax saving option is too low and the lack of distribution incentive is also hurting while the enrolment still persists to be cumbersome.

Affordable housing: ‘Housing for all’ has been the theme of last year’s budget and with an additional tax savings for the first-time home buyer through 80(E(E)) and an increase from the current Rs 50K would be welcomed while the cost of the house remains at Rs 50 Lakh.

Rural/Agriculture: This being the last full year budget before the general elections next year, the Union Budget could give higher priority to the uplift of the agriculture and rural infrastructure. There could be sops and other freebies that could enhance the image of the government at the same time providing impetus to the much-nee­ded investments in this sector.

Healthcare and Education: As the Prime Minister stated in his Davos speech, the government could possibly talk about creating better living conditions and standards. The PM and his government has been on a rhetoric about increasing the household incomes and bettering standard of living. Last budget was an affordable housing them and so this year could then concentrate on these aspects making it ease of living.

Also, an expectation of increased spending on infrastructure (urban planning, ports, highways, railways & waterways) along with more clarity on the bank re-capitalization program. Overall, a pumped up public investments and sops for private spending on health, education and social sectors would be of priority as general elections loom in the next year. The finance minister has a tight rope to walk over -s he needs to balance these expectations with the fiscal deficit targets.

By: K Naresh Kumar
(The author is co-founder of Wealocity, a wealth management firm and could be reached at [email protected])