Union Budget 2019: India's middle-class is hoping for a big bonanza in Finance Minister Nirmala Sitharaman's maiden Budget speech. After the significant backlash over unmet promises, especially the jobs front, the demonetisation nightmare as well as disappointment over the more pro-poor agendas in most of the past budgets under the Modi 1.0 government, this demographic is hoping to finally catch a break on July 5. Here are the five top expectation from Budget 2019:
Higher income tax exemption limit:
Former finance minister Arun Jaitley's first budget in 2014, widely seen as the harbinger of "Achhe Din", raised the personal income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh. Industry bodies as well as tax experts say that it is high time the threshold was revised further. If the exemption ceiling is hiked up to Rs 5 lakh, around 4.50 crore taxpayers will reportedly benefit.
FULL COVERAGE: Union Budget 2019
Increase income tax deduction under Section 80C of the Income Tax Act:
If fiscal constraints make it difficult for Sitharaman to consider a higher income tax exemption threshold, experts suggest revising the maximum deduction limit under Section 80C from Rs 1.5 lakh to at least Rs 2 lakh as an alternative. The current 80C limit, last revised five years ago, hardly provides any relief in the face of rising cost of living. Moreover, for most people, it quickly gets exhausted through expenses such as tuition fees, provident fund contributions and payments made against home loan principal, leaving little room to save through permissible investments. Assuming Sitharaman grants this wish, those falling in the 20 per cent and 30 per cent tax brackets stand to save around Rs 10,000 and Rs 15,000, respectively.
More tax benefits on home loan:
In line with Prime Minister Narendra Modi's Housing for All by 2022 agenda, the middle class hopes for some tax sops on home loans. Raising the limit of deduction for interest on housing loans to Rs 3 lakh is a popular demand. Currently, the interest portion of the EMI paid for the year can be claimed as a deduction from a homebuyer's total income up to a maximum of Rs 2 lakh. In addition, one can claim deduction up to Rs 1.5 lakh for the principal component under Section 80C. Hiking both the limits will hence benefit those looking at buying a house that costs under Rs 25 lakh.
The Confederation of Indian Industry (CII) has called for a National Employment Mission and setting up of an inter-ministerial and all-state National Employment Board for driving job creation in the country. "Employment generation extends to multiple dimensions and a national mission is required to address all aspects holistically. The Government National Employment Mission should include flexibility in hiring, tax incentives, education and skill development, and promotion of labour-intensive sectors," Chandrajit Banerjee, Director General of CII noted in a statement.
Revising tax slabs:
According to Kuldip Kumar, Partner & Leader, Personal Tax, PwC India, as an alternative to hiking the income tax exemption limit, Sitharaman could raise the 5 per cent tax slab from Rs 5 lakh to Rs 7.5 lakh. In its pre-Budget memorandum, the Federation of Indian Chambers of Commerce and Industry (FICCI) recommended a 10 per cent tax rate for the Rs 5-10 lakh bracket. Currently, individuals earning between Rs 2.5 lakh and Rs 5 lakh are required to pay 5 per cent tax along with cess, while those in the Rs 5-10 lakh bracket have to pay 20 per cent.