The countdown has begun for Finance Minister Nirmala Sitharaman to present Union Budget 2020. For the past few years, the taxpayer has been attempting to draw her attention to introduce some relief that would increase their disposable income; unfortunately, they have been disappointed.
In the last few Budgets and in the recent Ordinance 2019, quite a few tax sops have been announced for corporates that have lowered their tax burden; however, individual taxpayers have been left with hardly any such changes. Yet again, the individual taxpayer is hoping that he/ she will gain some tangible benefits from this budget.
A glimpse of what an individual taxpayer is expecting year-on-year from the finance minister and what has been accepted in the last few Union Budgets is presented below:
From the above, it can be noted that the finance minister has introduced various amendments; however, these did not provide any significant benefits to the individual taxpayer group. Rather, they increased the overall tax burden for them. Hence, the expectations of the individual taxpayer group are extraordinarily high in this Budget.
In the forthcoming Budget, one would expect a reduction in personal tax rates by rationalising the income slabs and corresponding tax rates. In addition, increasing the deduction under section 80C, raising the limits of the deduction for housing interest and set-off loss from house property and reinstating exemption of long-term capital gains tax on listed equity shares will definitely reduce the tax burden of taxpayers.
Finally, the reduction in individual tax will leave the taxpayers with more room to spend and consequently will improve demand, consumption and investment, which is the need of the hour to boost India’s economic growth.
While the expectations of taxpayers are at an all-time high, one needs to wait and watch how the finance minister will balance all of it.
(The writer is Partner-Personal Tax, PwC India. Ritika Arora, Director, and Kimberley Lewis, Associate, PwC, also contributed to this article.)
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Updated Date: Jan 28, 2020 14:20:16 IST