Indian middle class cheer: Income Tax exemption raise by Modi?

With the budget around the corner, all eyes are on Union Finance Minister Arun Jaitley, as the common-man expects him to unveil measures to curb inflation, create jobs, speed up infrastructure projects and create an environment that will attract Foreign Direct Investment (FDI) in the country. Union Finance Minister Arun Jaitley is expected to present the budget in the first week of July 2014. The middle class, which helped the BJP attain its Mission 272+ in the just concluded general election, is soon to be rewarded by the government.

With the common-man's expenditure pocket shrinking day by day, there might be a little to cheer about for all the taxpayers as there is a possibility of a slight reduction in direct taxes in the upcoming budget as Jaitley is likely to increase the slab of Income Tax exemption from the current Rs 2 lakh. The Finance Ministry in this regard has also sought a report from the I-T department. The CBTD is likely to submit a proposal by June 20, the sources said.

The government is also considering raising the tax exemption limit on home loans and health insurance premium, the sources added. The health insurance premium is likely to be raised by Rs 5,000. It is also expected that a 20 per cent tax on annual income of Rs 10-20 lakh against the current provision of Rs 5-8 lakh may be accommodated in the budget document. The transportation allowance granted to an employee by his employer for commuting between the place of work and his residence is tax-free to the extent of Rs 800 per month. This limit was set more than a decade ago, and needs to be revised upwards to at least Rs 3,000 per month, considering the ever rising commuting costs.

With the current level of interest rates on home loan, it is very difficult for any common man to buy a home. It is high time that the finance ministry strikes a chord with the people. It is very important that the government encourages savings and buying in the country by slashing the home loan interest rates. Besides all this, a major relief that a common man is expecting as of now is in terms of inflation. The nation's economy is being crippled by sky high inflation, which is at its best ever increasing rate.

It will be interesting to see how Modi government helps the country to cope up on that front. The Union Budget 2014-15 presentation will be closely watched by everyone, as the new government has to strike a balance between growth and inflation. While keeping the inflation in control it is also expected to bring in policy measures that will boost the economic growth.