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Budget 2019: Common man's expectations on personal taxation

The finance minister has started seeking views from the general public on Budget 2019 with a view to making it more participative and inclusive and has been receiving an overwhelming response from people. One will have to wait and watch till July 5, 2019, to see what they deliver in the budget.

Homi Mistry, Niji Arora and Vivek Mistry         Last Updated: June 25, 2019  | 14:14 IST
Budget 2019: Common man's expectations on personal taxation
The interim Budget of 2019 that was announced in February 2019 was a common man-centric Budget. Substantial tax sops for individuals such as increasing the standard deduction from Rs 40,000 to Rs 50,000, no tax for individuals with income up to Rs 5 lakh (i.e. after considering rebate), no tax on notional rent from the second self-occupied property, were announced in the interim Budget.

The interim Budget of 2019 that was announced in February 2019 was a common man-centric Budget. Substantial tax sops for individuals such as increasing the standard deduction from Rs 40,000 to Rs 50,000, no tax for individuals with income up to Rs 5 lakh (i.e. after considering rebate), no tax on notional rent from the second self-occupied property, were announced in the interim Budget.

The newly-appointed Finance Minister (FM) Nirmala Sitharaman will deliver her maiden budget on July  5, 2019. Here are a few changes the common man may expect in the Budget 2019.

Increase in tax deduction limit under section 80C for certain payments/investments: The current deduction limit of Rs 1.5 lakh under section 80C for certain investments/payment has not changed in the last 5 years. With the increase in the cost of living and the need to boost savings, the government should consider increasing this limit to at least Rs 2 lakh.

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Reintroduction of investment in Tax Saving Infrastructure Bonds: The government's focus is to develop and provide world-class infrastructure. Hence, the government may consider re-introduction of the deduction for investment in infrastructure bonds up to Rs 50,000. The deduction for investment on such bonds was earlier available under section 80CCF, to the extent of Rs 20,000 in FY 2010-11 and FY 2011-12. However, the same was subsequently withdrawn. The reintroduction of the deduction would provide long-term finance to the government and provide an impetus to the infrastructure sector.

Increase in the exemption limit: In the interim budget, the government announced there would be no tax for individuals with income up to Rs 5 lakh (i.e. after considering rebate). However, they did not increase the basic exemption limit from Rs. 2.5 lakh to Rs. 5 lakh. Hence, individuals earning higher than Rs 5 lakh, would be required to pay tax as per the slabs starting from Rs 2.5 lakh. Given the increase in compliance burden of filing income tax returns, the government should consider increasing the basic exemption limit to Rs 5 lakhs.

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Deduction for payment of interest on housing loan: The government is working to provide 'Housing for all' by 2022. Further, in order to give a boost to the ailing housing sector, the government should consider increasing the limit of deduction for payment of interest on housing loans from Rs 2 lakh to Rs 3 lakh.

Deduction under section 80 TTA: Currently, the deduction for interest earned under section 80 TTA is Rs 10,000. Last year, this limit was enhanced to Rs 50,000 for senior citizens. Given the increase in the cost of living, the government should consider enhancing this limit to Rs 50,000 for all individuals.

Allowing daycare/creche facilities expenditure: Currently, the act does not provide for any deduction in respect of expenditure incurred for daycare/creche facilities for working/salaried couples with kids. It is seen that more and more Indian families are adopting a nuclear structure with both husband and wife as working individuals. Consequently, today's working parents have to depend on good daycare facilities to ensure adequate care of their kids while at work.

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The daycare facilities are also expensive. To ensure that working /salaried couples depend on daycare facilities and to also ensure that daycare expenses are not burdensome, deduction of the actual expenditure incurred by individuals could be considered. If the expenses are borne fully/partly by employers, then the same should not be treated as perquisite in the hands of employees.

The finance minister has started seeking views from the general public on Budget 2019 with a view to making it more participative and inclusive and has been receiving an overwhelming response from people. One will have to wait and watch till July 5, 2019, to see what they deliver in the budget.

Also Read:Income Tax returns deadline of July 31 likely to be postponed

Also Read: Indians have $216-490 billion black money abroad, panel tells Parliament

(Homi Mistry is Partner, Deloitte India; Niji Arora is Senior Manager and Vivek Mistry is Manager with Deloitte Haskins and Sells LLP)

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