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Will the Budget bring ‘Acche Din’?

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New Delhi: All eyes are set on Finance Minister Arun Jaitley, who will be presenting his maiden Budget 2014-15 on July 10. From investors to businessmen, corporate leaders to economists, salaried classes to farmers, students to the blue collar and home-makers, everyone has high expectations from the new government. The growth rate, which is heading south, and inflation, which is heading north, need to be taken care of on an urgent basis.

India’s tax system is lopsided with an estimated 4 lakh people paying over 60% of income tax collected in the country. Salaried Indians pay more income tax than high earners in US and China according to a survey. However, many millionaire farmers do not have to pay taxes as agricultural income is exempt from income tax.

The government must keep in mind the common man’s expectations from the Union Budget. They have to be dealt with in such a manner that the budget is a win-win situation for both the government and the people of India. Though, it is impossible to present a budget which will make all sections of the society happy and satisfied.
 
The government should raise tax exemption limit, which at present is Rs 2 lakh per annum. It could do away by raising tax limit to at least Rs 3 lakh per annum. By doing so, the disposable income will be increased, which in turn will raise the spending power. Also, women should be given a special concession as far as tax exemption limit is concerned. Taxes should be exempted for women earning up to Rs 4-4.5 lakh.
 
Fuel price is directly related to inflation. It is like a vicious circle; if fuel prices go up, it leads to escalation in prices of all commodities. The government should develop such a mechanism in which volatility of global crude oil prices does not affect the common man. A government-controlled regulatory mechanism on fuel is must and the ongoing practice of fuel subsidies should be continued.
  
Students, who make a large chunk of the country’s population, also expect measures which would benefit them. A large amount of money should be allocated to higher education. New universities should be set up and global courses should be offered. The rate of interest on educational loans should be reduced in order to make foreign and domestic education more affordable. The procedure of getting education loan should also be simplified.
 
Every person dreams to own a house but rising prices of real estate/property are proving to be a roadblock. The government could raise the tax exemption limit for interest payment on housing loan from the existing Rs 1.5 lakh to Rs 3 lakh per annum. The government should also designate a special category for tax exemptions available on principle loan amount. Presently, it is included in Section 80C.
 
Section 80C of the Income Tax Act, at present, allows deduction of Rs 1 lakh for various investments, such as Mutual Funds, Provident Funds, PPF, Fixed Deposits and many more. The upper limit should be increased as far as Section 80C is concerned, as this will not only lead to increase in investments but will also bring down taxes to be paid.

 

Below are the expectations from the Union Budget:

  • Student: Government may allocate more funds to spend in the education space. This has been the trend over last many years but the amounts were not substantial. Students may expect to get education loan more easily at lower rates. Rebate could come for schools in the rural areas.
  • Homemaker:  can expect some increase in their monthly savings. The government is serious about controlling inflation and may seriously look at the agricultural sector. Gold could be available at cheaper price due to cut in duties.
  • Businessman: Can get relief from MAT (Minimum Alternative Tax) if not for all, some sector may see the roll back. Incentives for revival in capital expenditure cycle and a crystal-clear, time-bound road-map for GST will be a big booster for the organized manufacturing and trading community. Small and Mid-Size businessman are also quite fed-up with long bureaucratic approvals and procedures required for smallest of activities. It takes away a lot of their time & effort, which they would rather utilise on business development and productivity. 
  • Salaried: May see the increase in minimum tax slab, leaving more in an individual’s hand.
  • Senior citizen: May also see increase in the limits for the tax saving instruments. Some concession on the health care for senior citizen can be expected.

 

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