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.
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(Compiled from Various Articles on Taxguru with Own Inputs)