Budget 2016: Give more income at disposal for salaried couple

By Homi Mistry, Niji Arora & Vivek Mistry

With the rising inflation in India, couples are increasingly finding it difficult to meet their financial needs and to sustain their lifestyle. Hence, one would expect a budget which is pragmatic, balanced wherein an individual has more income at his disposal to be able to meet his financial goals (such as buying a house, ensuring family security, retirement planning, children education/marriage and medical emergency).

 Budget 2016: Give more income at disposal for salaried coupleIn view of the above, the following may be considered as some of the Budget expectation for a small family

1) It is expected that the basic tax exemption limit may be increased from the current Rs 2.5 lakhs to Rs 3 lakhs.

2) Given the increase in the property prices, especially in metro cities, the deduction allowed for interest on housing loan should be increased from Rs 2 lakhs to Rs 3 lakhs for self-occupied property. For a couple taking a joint loan the interest paid by each one would be allowed as a deduction separately. Further, the principal loan repayment would also be allowed as a deduction under Section 80C for each individual. This would result in substantial savings for the couple.

3) Deduction under section 80CCF should be reintroduced for investment in infrastructure bonds up to Rs 50,000.

4) For the salaried class, standard deduction should be reintroduced.

5) A separate deduction should be introduced for tuition fee paid for children/education cost of children.

6) In view of the increasing medical costs and rising medical insurance premiums, the Budget should consider increasing the deduction u/s 80D from Rs 25,000 to Rs 35,000.

7) While the government has introduced additional deduction for investment in National Pension Scheme, individuals are not willing to invest as the same is taxable at the time of withdrawal. It is suggested that NPS should be given EEE status to make it at par with other Retirement products ie Employees Provident Fund and Public Provident Fund.

8) Children Education Allowance is exempt up to Rs 100 per child up to 2 children. The same may be increased to Rs 1,000 per month per child.

With the Budget just around the corner one would have to wait and watch as to what are the benefits given to a small family.

Authors - Homi Mistry is a partner, Niji Arora, senior manager and Vivek Mistry, manager at Deloitte Haskins & Sells LLP

Updated Date: Feb 18, 2016 16:58:13 IST