The first budget post introduction of GST and last full-fledged budget of the current government is being followed by everyone with much curiosity and anticipation. Being an election year, the finance minister would have to undertake the arduous task of balancing social spends and growth spends. All eyes in this budget would be on how this balancing act is carried out. Budget 2018 is just 2 weeks away and the common man is looking forward to some gains that will help him improve his present and plan his future in a better way.
1. Increase in purchasing power
Among many expectations that the common man harbors, he wants the Government to increase his spending power in wake of implementation of GST whereby he now pays indirect taxes on almost every purchase. A taxpayer expects an increase in personal income tax exemption limit. For the last 4 years, the basic exemption limit has been at Rs. 2.50 lakhs; he wants it to be increased in this Budget. In order to encourage higher compliance, a simplification of Direct Tax laws can also be looked forward to.
2. Medical Cost Exemption
With medical costs on a rise, the common man expects the reimbursement component to be increased from Rs 15,000 to help cover the mounting medical expenses
3. Exemption under Section 80C
Currently, Section 80 C allows for an exemption of up to 1.5 lakh which includes payments towards life insurance, housing loan, PPF, ELSS, etc. Since a major chunk of an investor income is directed towards items under section 80 C, little is left for investments in other growth instruments. The common man wants an increase in exemption limit under this section to be raised to anywhere between Rs 2 lakh to Rs 3 lakh from the current levels.
4. Real Estate
For housing loans sanctioned during the period of April 1, 2016, to March 31, 2017, an additional deduction of Rs. 50,000 for first time home buyers was awarded under section 80EE in the last budget. The home buyers want that this deduction to be extended to loans sanctioned beyond 31 March 2017 as well. As this deduction was limited to property valued below Rs 50 lakh, irrespective of size and location of the property, this incentive was not available for the property located in tier 1 city where the value easily exceeds Rs 50 lakh. Home buyers in tier 1 city expect that certain amendments are made in the forthcoming budget to this rule so that their interests are taken care of.
5. Leave Travel Allowance
Employees can claim tax savings & exemption for their vacations anywhere in India. However, as travel to international destinations has become affordable, taxpayers expect that LTA exemptions should cover domestic as well as foreign travel.
6. Increase in Rural Spends
Increase in social spends for alleviating rural distress is expected by everyone as rural economy is the backbone of the Indian economy and will play a key role in curbing the inflationary trends. Proposal to double farmers’ income by 2022 makes rural economy elevation as the central theme for the Budget 2018. It is expected that a secular increase in Minimum Support Price (MSP) of crops is unlikely; however, segments like animal husbandry, dairy farming, livestock farming, and poultry to receive attention for supplementing the income of the farmers.
While the government has introduced a number of key reforms to spur overall economic growth, the common man is expecting this Budget to reduce their burden and ease the existing tax regime for them.