We are coming to that time of the year when we look up to “Mai-Baap” – our Sarkar- to change our life
for the better! It’s our fond hope that
the Finance minister will wave the magic wand and pull out a couple of rabbits
from the hat. Our expectations should not be too high on this front given the
fact that there has been limited relief emanating out of these budgets, in the
past. This time is going to be no different. Let’s temper down the expectations
a bit and look at what we could realistically expect from the Finance Minister.
One of the things that the Aam Aadmi is looking for is relief from taxes in
some form. Hence, the clamour is for higher exemption limits. This time around
there could be an increase in the basic exemption limit by Rs.25,000- Rs.50,000
for regular citizens and a similar amount of hike for Senior Citizens. There is a case for having a senior citizen
tax exemption structure starting at age
Most probably, the overall tax structure will not change as
the current tax slabs are broadly accepted to be moderate. Also, at some future point, Direct Tax Code
may make it’s appearance again, when another overhaul is expected. The surcharge of 10% for those above Rs.1
Crore is expected to stay.
The other item to focus on is regarding deductions. Section 80C currently offers deductions upto
Rs.1.5 Lakhs on a variety of investments like PPF, NSC, ELSS, Insurance
premium, Principal component of home loan etc. There is a case for increasing
this limit. But this may not happen.
Instead, RGESS may be made available to
everyone instead of just first timers & the tax deduction is expected to be
upto 100% ( instead of 50% at present ). There is a Rs.50,000 deduction
available if one invests in NPS under Section 80CCD, over and above the
deduction under Section 80C. There could be such other new categories coming in
where one may invest in insurance, for instance. But this is leading to a
proliferation of different buckets in which to invest. It would be much better
to allow one to invest in any of these, under one overall limit. But, this may
not come to pass.
No change is expected in deductions available under Section
80D as the current Rs.25,000 deduction available, for the family itself is at a
good enough point. There are no changes
expected in other Sections like 80E for Educational loan, Section 80DD &
Section 80U which offer deductions for people with disabilities.
There could be small changes like it happened last budget in
respect of the transport exemption hike from Rs.800 pm to Rs.1,600 pm.
There could be some big bang schemes which could address the
needs of the economically lower sections of the population. In the past Jan
Dhan Yojana & the Pradhan Mantri Jeevan Jyoti Bima Yojana, Atal Pension
Yojana had been announced in the Budget. That pattern may be expected to
continue this year as well. Which rabbits they may pull out of the hat here,
remains to be seen.
There have been schemes like Sukanya Samriddhi Scheme which
was introduced outside of the budget. Hence, budget may not be the only platform for
announcing new schemes. Even the latest changes in interest rate & credit
spread announced in various small savings & fixed income products like Term
deposits, PPF, Senior Citizens’s savings scheme, Post office MIS etc. are just
before the budget.
There could be many Trojan horses which could nullify the
effect of any tax breaks that one may get. That could come in the form of
enhanced Service tax, in a bid to slowly take it up to the levels expected
after implementing the Goods & Services Tax. Hence, this may go up to
between 16-18%. Similarly, excise &
customs duties may be adjusted upwards on various items, some of which will bite
the common man. This we have been seeing, budget after budget.
Those are the expectations.
Come end of the month and we will actually know what googlies are in
store for us in reality!
Author – Suresh Sadagopan | Founder
| Ladder7 Financial Advisories
www.ladder7.co.in
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