Increase exemption limit, give rebate under Sec 80C

ROBINSINGH@TRIBUNE.COM

Vijay C Roy

Tribune News Service

Chandigarh, June 28

The Modi government will present the first Union Budget of its second term on July 5. In the present circumstances when the tax collection was below the target in May, giving any relief to taxpayers would be a challenge, but the assessees pin hopes on getting some relief. The Tribune spoke to masses about their expectations on the personal taxation front.

Benefits for taxpayers

“We are anticipating a Budget proposal that clearly defines the priorities of the government, something which aims to bring a lot of benefits not only for the taxpayers but also for MSMEs, traders, pensioners, poor and backward sections of the society. We expect the proposals will steer towards its successful implementation after the Budget session in July,” said Ankit Agarwal, Managing Director, Alankit Ltd.

Higher exemption limit

In the Interim Budget, the government had announced that there would be no tax for individuals having income up to Rs 5 lakh (after deductions). However, the government did not increase the basic exemption limit from Rs 2.5 lakh to Rs 5 lakh. Taxpayers were of the view that tax for income up to Rs 5 lakh would be NIL, 10% for income up to Rs 10 lakh, 20% for income up to Rs 20 lakh and 25% for income beyond Rs 20 lakh. Also, the exemption for reimbursement of medical expenses and transport allowance may be reintroduced along with a standard deduction of Rs 40,000.  

Deduction u/s 80C

The current deduction limit of Rs 1.5 lakh for investments under Section 80C has not changed in the past five years. With the increase in cost of living and to boost savings, the limit of deduction under Section 80C needs to be hiked from Rs 1.5 lakh to Rs 2.5 lakh to provide saving opportunities for public at large.

Higher rebate on home loan 

“To support home buyers, we expect the government to increase the deduction on home loan interest, thus reducing the EMI burden. With three consecutive repo rate cuts in the RBI policy, the government has taken measures to improve the flow of money. In this Budget we expect the government to frame some concrete policy which will help the home buyers,” said LC Mittal, Director, Motia Group.

No tax on interest income

Investments made through mutual fund debt scheme offers tax advantage over bank deposits, postal saving scheme or bonds. “We suggest that this tax arbitrage should be done away with. Interest income in the hands of the end-user should be made tax-free. This relaxation will give banks and financial institutions leeway to raise deposits at lower cost and will also increase credit offtake,” said Nandakumar, MD & CEO, Manappuram Finance.