CA Sandeep KanoiCA Sandeep Kanoi

Union Finance Minister Arun Jaitley is expected to present his first full term budget on 28th February 2015. Taxpayers once again start expecting Budget will provide them long overdue tax reliefs. Individual and Salaried Tax payer expects that what Mr. Jaitley not done in last budget will do in this budget and increase income tax exemption limit from Rs. 2.50 Lakh to Five Lakh.

Some of the Middle class expectation from the Coming Union Budget of Mr. Arun Jaitley are as follows:-

1. Basic Exemption Limit: – Increase in Income Tax Exemption Limit to atleast 3.50 Lakh to meet the increased cost of living.

2. Medical Reimbursement – Limit for exemption for Medical reimbursement perquisites should be increased to Rs. 50000/- from existing Rs. 15000/- to meet the increased cost of Medical services.

3. Transport Allowance – The transportation allowance granted by the employer to his employee for commuting between the place of work and residence is tax-free to the extent of Rs 800 per month. This limit was fixed more than a decade ago, and needs to be revised upwards to at least Rs 3,000 per month, given the rising commuting costs.

4. Section 80C Limit – Section 80C was introduced in place of section 88 w.e.f. 1-4-2006. Limit of One Lakh of Investment under section 80C was fixed in A.Y. 2006-07 and after 9 Years the limit is increased by mere Rs. 50,000/- from A.Y. 2015-16 despite multifold hike in prices. The Limit needs to be increased to atleast to Rs. 3 Lakh.

5. Increase in Home Loan Interest Limit – Home loan Interest exemption limit for self-occupied house was fixed at Rs. 1,50,000/- wef A.Y. 2002-03 and after 13 Years the same been increased by mere Rs. 50,000/- to Rs. 2 Lakh wef A.Y. 2015-16. The Limit should be raised to at least 5 Lakh considering the 6-7 time raise in prices of property across the country.

6. Faster process of Income Tax Refund – Income Tax Refund needs to be processed faster and taxpayers should not be penalized for deficit in revenue target by withholding the refunds and further there should be a mechanism which can insure that taxpayers should not be penalized for mistakes of tax deductor.

7. Revision in education allowances: The exemption of educational allowance Rs.100 per child per month & hostel expenses allowance Rs.300 per child per month is the limit fixed long back. The same limit can be revisited and correct according to the current cost of education.Even though the deduction of tuition fees allowed under section 80C up to Rs. 1.50 Lakhs, expenses other than tuition fees also is the major amount in current educational costs.

8. Deduction in respect of notice period pay: This is most debatable issue during the change of employment. If employee resigns from the current employer and going with serving notice period, the payment made by the employee to employer to compensate will be deducted from his salary payable. But as per tax calculation it will be shown as income but there is no clear provision in deduction for the same. So it can be considered in this budget.

9. TDS issues faced by individual: Common problem facing by salaried individual/ non salaries case also is that TDS credit is not reflecting in the form 26 AS and unable to match the TDS amount. Even though TDS amount recovered from the income and deductor fails to pay the TDS or not update the TDS return, it is not reflecting in the form 26AS. This is very embracing situation for any person, after paying tax also not getting credit due mistake of others. Even though some recent judgements are favoured to the deductees, however this has to be provisioned in the act itself to avoid the litigation issues

10. Increase in  Threshold limit for Wealth tax – Currently, Wealth Tax is levied at the rate of 1% on net wealth exceeding Rs. 30 Lacs. We expect it to be increased to Rs.  1 crore.

11. Standard Deduction must be back – Till Assessment Year 2005-06, there was standard deduction for salaried employees. In this period of inflation, government must allow standard deduction to salaried employees once again.

12. Leave Salary – Leave salary is exempted at retirement to maximum of Rs 3,00,000 and it too was fixed in 1998. Government had revised maximum exempted amount of gratuity to Rs 10,00,000 from Rs 3,50,000, it may revised this limit too.

13. Free Food – Value of free food and non-alcoholic beverages or meal vouchers provided by the employer is exempt from income tax to the extent of Rs. 50 per meal. Looking at present inflation, it should be Rs 100 per meal.

14. Interest Free Loan – Interest free/Concessional loan to employees is exempt, where Loan amount does not exceed in aggregate Rs 20,000. It will be good if this limit is revised to atleast Rs 50,000.

15. Reduce the maximum tax rate: Last year, removing the surcharge only benefited the higher income group and there was no respite for the lower income group. So, this year lower and middle income group can be benefitted by reducing the peak rate from current 30% to 25%. Further, the peak rate should be attracted at significantly higher income slab (as compared to current limit of Rs 5,00,000). Though this aspect has been recognised in the proposed Direct Tax Code (DTC), the same also needs to be considered in the forthcoming budget.

In addition to above people wants an end to Tax terrorism and wants a simple taxpayer friendly tax regime.

Image courtesy of nokhoog_buchachon at

(Compiled from Various Articles on Taxguru with Own Inputs)

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  1. rajiv mangrulkar says:

    ideally abolish all taxes and its multiple and complex points of incidences and exemptions hence the professionals compel to resort to tax evasion advises though corrupt means to manage everything, high risk high returns is the maxim since unending litigation and disputes pending for decades and ultimately result in settlement of notional demands from revenue authorities.
    Hope one reasonable rate tax at the point of payment or receipt irrespective of type of assess e/dealer is desirable. but how the govt and its multifarious dept’s will survive and what about existing and past tax issues involving huge population.

  2. Amar Nath Pal says:

    1. Post retirement monthly income scheme “Senior Citizen Savings Scheme” is closed. Need to start a new one.
    2. Tax free Bonds are required to be re-introduced.

  3. Vignesh says:

    The Dedution allowed under 80U is also the same for almost 10 years. Do the central government think that an expense incurred by the family for taking care of a differently abled child is lesser than 1 Lac.

    They need to be provided with Ramps, Wheel Chairs, Automobile for their independent navigation and so on. Till date the current deduction allowed is just 1 Lac. It should be increased atleast to 2 Lac / Annum.

    Note : A basic automated wheelchair itself costs Rs. 75000 Minimum and the battery replacement for it almost requires rs 20000 Per Annum.

  4. ravi says:

    Sir, If employer or TAX deductor made mistake in Form 26AS and even after several requests do not rectify error occurred by them than where to go for resolving this serious issue and because of this error tax individual payers get notice from Income Tax Department. Moreover impose penalty but even then Employer/TAX Deductor never bothered due to corruption prevailing specially in the department like MCD Delhi. When our FM will look into such matters as they harassing employees (ladies) & put demand for bribe to rectify these errors.

  5. hemen parekh says:

    One Up on Free Wi – Fi ?

    AAP won Delhi Elections by offering Free Wi Fi / Water / Electricity etc
    Apparently , offering anything ” Free ” , works like a sure-fire strategy
    In the past , various political parties have managed to ride home to power by offering , free,

    * Rice
    * Mangal Sutra
    * Buffalos
    * Laptops / Tablets
    * Mixies / Bycycles…….etc

    For the forthcoming elections in Bihar , what freebies can we expect to be promised ?

    > From RJD / JDU / Congress etc :
    * Free Education / Health Care / Roti – Kapada – Makaan / Transport / LPG ..etc

    > From BJP ( only from BJP – being in power at the Centre ) :
    * Total abolition of Personal Income Tax ?

    Sure , Centre would lose revenue of ( approx ) Rs 3 lakh Crores

    But look at the Up-Side :

    * Those 8 Crore ( out of 11.5 Crore ) Bank Accounts opened under Jan Dhan Yojana , which have , currently ZERO balance , would suddenly swell with cumulative deposits of , Rs 30 lakh Crores !
    Don’t ask , where the money came from ! Just let them spend ( or invest ) to expand the economy , by boosting Purchasing Power

    * Permanent solution to prevention of future generation of Black Money !
    ( By taking away incentive to hide any income ! )

    * Elimination of ” Tax – Terrorism / Root of all corruption ”

    * Save crores of Rupees thru dismantling of Personal Income Tax department

    * Centre will not need to beg Japan / Russia / China etc to bring in dollars to invest in Mega Cities / Rail Corridors / Sagar Mala ports / Highways / Airports / Power projects .. etc

    Of course , ” Experts of Economy ” will advance dozens of reasons , why this is a crazy and impractical idea
    But then , Economy of a country is too serious a matter to be left to the Economists !
    A seemingly ” impossible ” thing gets done , simply because SOMEONE wants it done !

    Shri Jaitley :
    It is still not too late to up the AAP !

    with regards
    hemen parekh / 12 Feb 2015

  6. S Sudarshana says:

    Mr.IM Malek: Yes retirement is rised from 55 to 58 to 60; so also the gratuity from 3.5 lakhs to 10.00 lakhs. One should know funda here is the govt should ensure that the retirement benefit (its interest if put in security/FDs) and the pension will not become more than the salary! Govt has done more than what it should by increasing the pension by 20% from 80 onwards ultimately to the full salary level.
    Instead govt must utilise the services of the pensioners for a nominal honororium with pension.

  7. Santanu says:

    If the first point is true, I think this will be too much. I don’t think that Govt will have that much flexibility to raise the exemption limit to 3.5 lakh at one go.

  8. I M MALEK says:


    There are some drastic changes are to be required as a matter of offer to the service personals like change in Gratuity procedure from old ratio to new ratio –
    Old ratio : 15 days salary for one year of service and limited to maximum 20 salary ( Basic + DA ), along with income tax relief up to Rs. 10,00,000/-


    Suggested New ratio : 15 days salary for one year of service and limited to maximum 25 salary ( Basic + DA ), OR ACTUAL SERVICE PERIOD along with income tax relief minimum up to Rs. 20,00,000/- IN PLACE OF Rs. 10,00,000/-

    It is to be aware that, our Govt. has think for upper age of 62 yrs.for retirement from Service, in place of existing 60 Yrs. Which was earlier 55 and 58 yrs. So why Gratuity slab could not be revised as suggested above.


  9. unnikrishnan v says:

    While all suggestion s are on relief to public, steps should be taken to realise the hefty confirmed demands.penal interest for delayed payments could be made at par with service tax ,I.e 24 and 30% after six months and twelve months. The pre deposit to be made for filing appeals as in indirect taxes of 7.5 and 10% of demands would reduce the avoid able appeals.Speedy and time bound disposals of appeals and prompt recovery steps would garner more revenue to govt.

  10. krishna says:

    Dear Sir,

    Income Tax Exemption Limit to at least 4 Lakh to meet the increased cost of living. It is important to middle class people. And give the exemption to file the return for exempted limit covered peoples.

  11. Manoj says:

    Dear Sir,
    I am working in an autonomous body of Govt. of India. I have joined service on 16th January 2013. After my training period of 1 year, i took charge as Assistant Engineer. My NPS account was opened after my confirmation and I have paid Rs.53491 for FY 2014-15 and an arrears of Rs.51214 for FY 2013-14 towards NPS i.e. I have paid a total of Rs.104705 towards NPS in this FY only. Same amount is contributed by the organisation.

    The problem is they added the total amount i.e., Rs.104705 to my gross but are deducting only Rs.53491 and saying that I have to pay tax for remaining Rs.51214. Many of my colleagues who joined with me are facing the similar problem. Please clarify on this issue & suggest if there is any section for exempting the arrears. Please reply as soon as possible. Urgent.

  12. Dr. Arun Draviam says:

    Notwithstanding the wrong choice of word – embracing instead of embarrassing- I agree that tallying the Form 26AS should not be put on the citizen of India. This cannot stand constitutionality, if it is challenged in a writ petition or a PIL.

  13. ashok dalmia says:

    Kanoiji, I liked your Article on Expectations from Budget 2015.

    I had previously also written to you that there is ambiguity in claim of deduction u/s 80DD medically handicapped dependants. If unfortunately there are more than one MENTALLY CHALLENGED dependants with a person, the INCOME TAX RETURN does not allow deduction for more than 1 dependant when E return is filled up which is NOT THE LAW. The law provides for deductions for more than one dependant. There may be very few assessees of such kind but unfortunately they are the MOST UNFORTUNATE ONES who have to bear the brunt of INCOME TAX SOFTWARE. If they have income beyond 5 lacs they do not have option but to file E return.
    It seems that your have a very strong forum and will carry a lot of weight. You may pass this message to SHRI ARUN JAITLEY or else send me email address where i can put this message through orgnaisations known to me so that this few unfortunate persons are not put to trouble due to TECHNICAL SNAG of INCOME TAX DEPT.

  14. CA. S.D.Verma says:

    Dear Sir,
    Apart from above 15 points for Income Tax Act, I would also like to add one point for Service tax. Basic exemption under Service Tax Act is Rs. 10.oo lacs for the last so many years.The Govt, after considering inflation enhanced tax audit limit from
    Rs. 60.00 lacs to Rs. 1.00 crore w.e.f. A.Y. 2013-14. On the same ground, basic exemtion limit of Service tax should also have been enhanced to at least Rs. 25.00 lacs from Rs. 10.00 lacs which has not been done so far. It is high time that basic exemtion limit of Service tax should be enhanced to Rs. 25.00 lacs in this budget.If this limit is enhanced, many of the service provider will be benefitted and Govt will also get revenue on income tax due to enhanced income which presently they are avoiding due to existing limit.

  15. S Sudarshana says:

    This was much awaited and should have come few weeks earlier. Budget is round the corner. But then, Modi govt. can act on any suggestion given till the last moment! All the above are standard requests and will be dealt even without a memorandum.
    I suggest the following simple but very important suggestions to the Finaance Minster:
    1) The condition for exemption u/s 24-B that the house should be ready within 3 years should be dispensed with as the delaly is generally not to be attributable to the assessee. The delay already cuases lot of stress and if the tax exemption is taken away that hurts. It should be extended to 5 years if the period cannot be dispensed with.
    2) Banks should not call the tax deducted on FDs as TDS but must use the phrase ATDS (advance TDS) or Advance Tax as TDS implies tax liability is taken care of by banks and the invester need not worry. Large number of assessees have surprised to see that they still have to pay a heavy tax even after paying the TDS on interest income. This will not cause any monetary strain to the Govt./FM but will help the tax payer to know where he stands on interest income.
    3) Education Loan: Govt should ensure whatever the notifications govt makes abouu doling out the subsidy to the lonees are acted upon by banks without expecting the lonee to apply and run from piller to post. Banks are less responsible about interest subsidy to them.
    4)Reg: section 80-C: The limit given 1.5 lakh now and whatever figure it is enhanced this year should be independent of contriblution to National Pension Scheme and PPF as the limit is reached easily without the contribution to these excellent schemes. Even tuition fees and medical expenses u/s 80-D must be independent of the limit prescribed.

  16. Varaprasad Daitha says:

    Apart from the reliefs enlisted in this, FM is also expected to make changes in the tax administration. The concepts and outlook of officers of the department have not changed to tune the changed circumstances. They still are eyeing surveys as a tool for more tax collections. They are also ignoring the instructions that they should not resort to declarations during surveys. The selection of survey cases is also not spread to various trades. They are concentrating only on a class of assessees like Builders & real estate operators. They are not catch new areas like gold jewellery trading wherein the outlets sell on consignment basis. In this process large unaccounted gold is being sold by storing consignment goods. They do not compare the goods available with the outlet with that of the consignor. Similarly they are not able to concentrate that extra load being carried through railway wagons to export zones. It is a fact that the products like cement, food grains etc. are loaded at least by 10% if wagon load bearing without paying any taxes.

  17. Anand Pai J says:

    Dear Sir,

    Please correct the point no.4 ” Section 80C limit” as follows ” after 9 years the limit is increased by mere Rs.50000/- [ Fifty Thousand Only]from A.Y 2015-16″ and not Rs.5000000/- [ Five Lakh ].



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