Considering that this is the last unhindered union Budget 2018 before next year’s elections by the present government, there is a lot of expectation riding on the shoulders of the Finance Minister and his team in terms of relief from levy for the common income tax payer.
Income Tax Payers expect from the Union Budget 2018
The Union Budget 2018 has been a statutory exercise since November 26, 1947, when the first such bill was tabled by then Finance Minister, R K Shanmugam Chetty. Traditionally, this document used to be served on Parliament on the last working day of February but since 2016, it is being done so in the first week of the same month instead.
Most of us are salaried working-class individuals who employ hard-earned skills to obtain living incomes. We want lower taxes, lower cost of vegetables, rice and wheat and better transport services. There is also the shocks to purchasing power and prices induced by demonetization and the first implementation of the GST regime to make up for.
For instance, medical prices have sky-rocketed but the annual income tax deduction you are offered has stayed at a measly Rupees 25,000 as per Section 80D of the Income Tax Act of 1961. Similarly, medical reimbursement is limited to Rupees 15,000. Then there is the 80C exemption limit for insurance, provident funds and so on at an inadequate Rupees 1 lakh 50 thousand.
Union Budget 2018
Unfortunately, there may be limited choices for the serving Finance Minister to offer concessions. There is a strong need for balancing Fiscal consolidation with Deficit financing to inject growth. Bank re-capitalization and re-calibrating the GST system should be and is the number one priority of the executive right now.
Note that the government borrows from the bond market when it doesn’t have adequate capital and that puts a strain on the cost of money, in turn, increasing inflation rates.
Nevertheless, what can the salaried class reasonably hope for in this budget? Here are some possible benefits:
1. Reduction of tax rate on NPS withdrawal: Pensions are the only source of income for a large number of honest income taxpayers because of the frailties of old age and other ailments. It is hoped that the government will encourage contributions to the National Pension Scheme by lowering tax outgo under withdrawals and also relax the condition mandating investment in annuity. At the moment only 60% of the retirement fund can be withdrawn, of which, one third is taxable as income.
It can instead invest the money deposited here in infrastructure related equity to meet its financing requirements. Alternatively, there could be a rise in withdrawal limit not incurring incidence of tax. Tier 2 NPS withdrawals are currently a jumble of procedure requiring rationalization.
2. Bitcoin Taxation: Cryptocurrency is direly in need of a law to regulate its trade and transfer among users. Once, the RBI makes clear its position on this avenue of income, people would be encouraged to share capital gains information. This could be a new source of revenue for the union as well.
3. Another demand that seems to be gaining momentum is the shortening of the holding period for capital assets such as a house or estate so that property holders, too, can benefit from fluctuations in the market for purely speculative reasons so that they may be on par with stock investors. Taxes can then be revised instead. For homeowners, removal of the ceiling on deductions accounted by home loan interest payments would also be a huge break. Real Estate Investment Trusts (REITs), a relatively new investment vehicle in India for the small taxpayer is begging for an increase in LTCG holding period to bring them on par with equity instruments carrying a similar risk profile.
4. A popular demand before this year’s budget is the re-introduction of standard deduction applicable to every salaried individual to reduce the burden on personal taxes for middle-income families. Tax procedures require further streamlining and simplification to enable a broader tax base and enhance tax compliance.
5. There is also a case for increasing the exemption limit for income tax from Rupees 2 lakh 50 thousand to 3 lakh and possibly even 5 lakh considering the expenses and obligations of married couples in metropolitan cities today where most of the country’s population seems to be migrating to. Because of the likely shortfall in revenue, tax slabs could be re-jigged instead. The FM could introduce a new income tax slab of Rupees 10 to 20 lakh, decrease tax for the lower bracket and increase it for the higher bracket and so on.
Worried about your income tax return? We can help. Reach us here.
This is a great article on what are the expectations of a common man from india budget. Common men have faced all the blows with demonetization and GST implementations. Looking for some relief now.There are so many speculations around Budget 2018-19 and many people have their hopes set on it.
Greetings! Very useful advice in this particular post!
It is the little changes that produce the most significant changes.
Many thanks for sharing!
I really like your blog.. very nice colors & theme.
Did you make this website yourself or did you hire someone
to do it for you? Plz answer back as I’m looking to design my own blog
and would like to know where u got this from. appreciate it
If some one wishes expert view concerning running a blog afterward i propose him/her to go to see
this weblog, Keep up the pleasant work.
Hello there! This is my 1st comment here so I just wanted to give a
quick shout out and say I really enjoy reading through your articles.
Caan yoou recommend any other blogs/websites/forums that go over the same topics?
Thaanks for your time!
Nice post. I was checking continuously this blog and
I am impressed! Extremelly helpful info particularly the last part 🙂 I care for such info a lot.
I was looking foor this particular information ffor a very
long time. Thank you and best off luck.
I will immediately grassp your rss as I can’t fknd your e-mail subscription link or newsletter service.
Do you’ve any? Kindly alloww me realize in order that
I could subscribe. Thanks.
This site really has all the info I needed abut this subject and
didn’t know who to ask.
As soon as I observed this website I went on reddit to share some
of the love with them.
Hi there would you mind letting me know which web host you’re using?
I’ve loaded your blog in 3 completely different browsers and I must say this blog loads
a lot faster then most. Can you recommend a good web hosting provider
at a honest price? Thank you, I appreciate it!
Thanks for sharing this helpful information..it was easy to understand the content..good work..keep it up