All focus is on 29th February 2016. It is the date when the third union budget of the NDA government will be announced by the Finance Minister of India. All the citizens, especially the salaried class and the corporates, are anxiously waiting for the Speech to be given by the Minister Arun Jaitley on this Monday. He has already said that there is a need for structural reforms and therefore, we cannot expect a ‘populist’ budget.
Here we share some expectations in the area of income tax. The Minister, Jaitley has already announced that the union budget for the coming FY will provide more than 1 Lakh and 10 thousand Crore. In the pre-budget meet on February 10, requests to make up to Rs. 5 Lakh as tax-free amount has been made. There are possibilities to revise the personal income tax exemption to 3 lakhs from the current 2.5 lakhs considering the living cost and a need to increase the disposable income in the hands of the individuals. A higher deduction limit on home loan interest can also be expected. The salaried class also wants the deduction limit u/s 80C to be revised. The section hasn’t be revised since FY 2014-15. Therefore, there are higher possibilities that the government may look at adding some saving products and increasing the limit to Rs. 2 Lakhs.
The government is all set to reintroduce the extra window of Rs 50,000 for claiming deductions under Section 80C for investments in infrastructure bonds. Currently, various specified investments are eligible for deductions subject to a threshold of Rs 1.5 lakh and additionally, a deduction of Rs 50,000 is allowed for contributions to the National Pension System under Section 80CCD. In addition to all these, there are speculations about the reintroduction of the standard deduction for salaried professionals.
Also, there are chances for treating certain mutual funds at par with the equity mutual funds. At present, certain categories of the mutual fund, such as asset allocation funds, multi-asset funds, funds of funds, etc are outside the ambit of the term “equity oriented fund” as defined under the Income Tax Act. For this reason, the preferential tax treatment for equity funds is not available for these funds.
With an aim to boost the real estate market which is facing a recession now, a tax deduction is expected to be allowed in case of delay in the construction of a property. Further, there will be an increase in threshold rates for Tax Deduction at Source (TDS) to prevent incorrect tax demands on the assessee.
Small entrepreneurs have demanded a special rebate in Income Tax.Focus will be on cashless transactions. Debit and Credit card transactions could become cheaper.
