What are the expectations of individual taxpayers on personal tax front?

On a personal front, salaried individuals will hope that the tax slab rate is modified for individual taxpayers

Archit Gupta January 23, 2019 12:48:34 IST
What are the expectations of individual taxpayers on personal tax front?
  • As per the current Income Tax Act, the tax deduction limit on investments stands at Rs 1.5 Lacs annually

  • On the personal front, individual taxpayers want some changes to the long-term capital gains tax

  • LTCG tax is applied without any changes if one decides to move from the growth option of investment to the dividend option

With the Budget due next month and the upcoming elections in the picture, there is heightened curiosity amongst people about what’s in store for the next financial year.

While there is enough precedence of not making changes via the interim budget, inclusion of favourable tax and economic policy changes certainly has political ramifications. There is also some speculation that since this will be the final budget to be presented before the Lok Sabha elections, there is likely to be a departure from the norm around interim budgets.

What are the expectations of individual taxpayers on personal tax front

Representational image. Reuters

Budget 2018 had a lot of surprises for the salaried class people. This included reducing the tax rates for the 2.5 lakh - 5 lakh slab from 10 percent to 5 percent, and replacing transport allowance and medical reimbursement with the standard deduction of Rs. 40,000.

On a personal front, salaried individuals will hope that the tax slab rate is modified for individual taxpayers. Levying a higher rate of tax for those earning in excess of 20L and reducing the burden on small taxpayers is probable in this scenario.

The other area of expectation is regarding the possible increase in the 80C deduction limit. As per the current Income Tax Act, the tax deduction limit on investments stands at Rs 1.5 lakh annually. Individuals, however, have strongly vouched for a revision of this limit. The ask is for shifting the tax deduction limit from the existing Rs 1.5 lakh to Rs 2 lakh. The shift may seem big but given the rate of inflation and the present state of the economy, the ask is not one without reason.

On the same note, on the personal front, individual taxpayers want some changes to the long-term capital gains tax that is levied on equity returns. While LTCG tax is applied without any changes if one decides to move from the growth option of investment to the dividend option, or the other way around, the same is not for some other schemes.

What are the expectations of individual taxpayers on personal tax front

For instance, shifting one’s investment from debt to equity, like in the case of a ULIP or National Pension Scheme or the reallocation of funds do not qualify as a taxable event. People have asked for uniformity in the way taxes are levied when there are switches between schemes.

Another expectation that many taxpayers have is regarding the NPS rules. As per the announcement of new rules for NPS, an increase in the government's contribution to the central government employees from the existing 10 percent to 14 percent has been proposed. Also, the withdrawal of 60 percent is proposed to be made tax-free which was earlier at 40 percent only. The ambiguity about which taxpayers are included; central government or self-employed or those working in the private sectors will likely be clarified in the upcoming Budget.

While there are many aspects of the budget that taxpayers want clarity and relief from, these are some of the pressing areas of personal taxes that have been on most minds in the run-up to the interim budget.

(The author is founder and CEO, ClearTax)

Follow full coverage of Union Budget 2019-20 here

 

 

To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.

To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

As Rhea Chakaborty and Bollywood are vilified, silence of industry's biggest stars is no shocker
Entertainment

As Rhea Chakaborty and Bollywood are vilified, silence of industry's biggest stars is no shocker

Despite the ongoing vilification of their industry and of a young member of their professional fraternity that went on for more than three months, none of the big stars of Bollywood found the heart to speak up.

Rhea Chakraborty denied bail: It’s not just SSR case, persecution of random citizens could be watershed moment for India
India

Rhea Chakraborty denied bail: It’s not just SSR case, persecution of random citizens could be watershed moment for India

The persecution of Rhea Chakraborty, the actor’s one-time partner, borders on lunacy, if we are to cling to some notions of rationality and humanity

Umar Khalid’s arrest in connection with February 2020 Delhi riots can be seen as cognitive incarceration of Muslim youth
India

Umar Khalid’s arrest in connection with February 2020 Delhi riots can be seen as cognitive incarceration of Muslim youth

The recent arrest of Umar Khalid is being seen as one of the most outrageous steps in a series of sustained attacks on the flag bearers of a certain cause.