Every year taxpayers are waiting for budget at the end of February.Every body has some expectation of good news from budget .People generally expected that there will be reduction in tax rates and relief from lengthy procedures under various taxes . This years also budget expectations are high as two years ago at the time of Congress govt our present Finance Minister has used the word "Tax terrorism " but what a common men get from earlier two budgets of Modi govt is a matter of debate .We have listed out most common expectation from Budget -2016.
1. Increase in Exemption Limit of Income Tax : The first and most common expectation of taxpayers is increase in tax exemption limit of Income Tax.This year we wish that exemption limit may be increased to 3 lakh from earlier 2.5 lakh .Further for senior citizen limit should be increased to 350000 from earlier 300000/-.But hopes are dim after economic survey recommends that exemption limit should not be increased as it will leads decrease the persons covered under tax net.
2. Increase in deduction Limit for section 80C from 150000 to 200000/-
3. Reintroduction of Standard deduction to salaried person : Earlier a standard deduction was allowed to salaried person for rs 30000/-.which has been withdrawn for the sake of simplification ,which should be restored.
4. Increase in various limit related to exemptions available to salaried persons: and all such limit should be linked with inflation so that it will increased automatically every year.
- Increase in allowance exemption for Transport allowance from 1600 to 3000
- Increase in exemption for education allowance from 300 to 1000
- Increase in exemption for hostel allowance from 100 to 1000
- Increase in exemption for medical reimbursement from 15000 to 50000/-
- Increase in exemption limit for leave encashment to non govt. employees from 350000 to 600000/-
5. Increase in 80 GG limit for deduction for rent non salaried person and salaried persons not getting HRA from 24000 to 72000/-
6 Revival of addition deduction or Infrastructure Bonds :Modi govt's main thrust is on infrastructure and this sector needs huge funds ,so Finance minister should restore additional deduction of infra bonds 80CCF up to Rs 30000-50000/-
7. Exemption on withdrawal from National Pension scheme (NPS): As per present system ,all withdrawals from NPS are taxable .However other long term saving schemes like EPF ,PPF ,Insurance ,equity mutual funds etc are tax free on maturity. So to increase flows in NPS ,NPS should also be tax free on maturity.
8. Increase in deduction for house loan interest : Present limit for house loan is 200000/- but it should be increase to Rs 250000-300000/- as cost of housing is increasing so loan amount and interest is also increasing .Further increase in deduction also encourage persons to build their own houses.
09. Increase in TDS cut off limit and reduction in TDS rates : Tax reform committee has recommended the age-old threshold limits of TDS should be increased to avoid the situation of first collection of taxes and its subsequent refund. Further, TDS rates should also be rationalized keeping in view the restructuring of the Income-tax rates over the past decade.
11 . Presumptive Tax schemes for Professional : A panel on tax reforms has recommended that a new presumptive scheme for professional persons should be introduced under which professional may file his income @ 33.33 % of their professional receipt.
12. Increase of tax surcharge for income more than 1 crore from 12 % to 15 %.
13. Reduction in corporate rate tax by 1 % and withdrawal of few exemption in lieu of rate reduction.
14. Tax incentives for startups : As govt have already announced that tax holiday will be announced for startup for three years ,This will be formally added through this budget.
15. Increase in Service tax Rates and exemption limit: This is most realistic and most disliked expectation from this budget . whether we like it or not but It is expected that service tax rates will be increased by 1.5-2 % from 14 to 15.5 to 16%.Further Finance minister should also increase exemption limit under service tax from 10 lakh to 15 lakh.
- Capital infusion in Government banks
- Announcement of Bad Bank (ARC)
- reduction of excise on electronic /computer /mobile
- Increase in taxation for diesel vehicles
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