Reema Sharma/Ajeet Kumar
The countdown for Union Budget 2014-15 has begun! Just like industries, the salaried class has a lot of expectations from the new finance minister Arun Jaitley. Be it tax exemption, hiking the transport allowances, increasing the rebate cap on home loans, giving subsidies to farmers or addressing the issue of women's and senior citizens' taxation- the decision of the Finance Minister will be closely watched by all and sundry. The following is the list of most awaited announcements.
Raising Income tax exemption limit
The slab of tax free income has not moved up in line with real inflation. The current basic exemption limit of Rs 2 lakhs should be increased to at least Rs 3 lakhs with the limit for women going up to Rs 3.5 lakhs. This will increase the purchasing power of individuals and stimulate demand.
Raising tax exemption under 80C
Presently, deductions under section 80C, which allows tax sops on savings is pegged at a maximum limit of Rs.1 lakh. This limit can be extended to Rs.3 lakhs to encourage savings.
Hiking the cap on interest of bank saving A/c
Last year, the government had announced that income on interest rate of bank savings accounts (in post offices, co-operative banks, bank accounts) up to Rs 10,000 will not be taxable. Here, a thought can be given to increase the interest limits on such saving account to a minimum of Rs. 20,000.
Raising transport allowance
The transportation allowances granted by the employer to his/her employees for commuting between the place of work and residence is tax-free to the extent of Rs 800 per month. This limit was fixed more than a decade ago, and needs to be revised upwards to at least Rs 3,000 per month, given the rising commuting costs.
Hiking annual medical insurance cap
On deductions for medical expenses, which currently stand at Rs 15,000 per annum, should be hiked to Rs 50,000. The revision has not happened in the past 14 years, but medical costs have surged manifold since then.
Children education allowance
The educational allowance given to employer per month per child (upto two children) should be hiked. The allowance is currently a meagre Rs 100. This should be raised to a minimum of Rs 1000.
Hiking the cap on interest on home loan
Realty sector has been under pressure for quite some time now and the government should incentivise investments into the sector, which will go a long way in helping the economy. At present, interest payments of up to Rs 1.5 lakhs are eligible for deduction and it should be increased to Rs 3 lakhs.
Payment of principal amount on home loan
There is demand from a wider section that separate provisions should be made for the principal loan amount which is currently included in 80C [under which maximum limit is Rs 1 lakh (all inclusive)].
Launching of equity schemes
The government should modify the Rajiv Gandhi Equity Savings Scheme (RGESS) and bring more equity saving schemes like this in the forthcoming Budget to attract first time investors. The RGESS, which was announced in the Budget for 2012-13, seeks to provide tax benefits to first-time investors in stock markets.
More room should be given for women and senior citizens in tax rebate and interest on PF contributions of employees should also be hiked to 12 percent. As of now, senior citizens earning upto Rs 2,50,000 do not come under the tax bracket. They are expecting that this slab will be increased.
Similarly, very senior citizens (above 80 years) who do not come under tax bracket for earning upto Rs 5 lakhs are expecting a further increase in exemption limit.
Currently, women earning upto Rs 2 lakhs are exempted from paying tax. There is widespread expectation that the limit is hiked by a minimum of Rs 50,000 over and above the general category exemption limit.
Housewives
Another very important section that is eagerly expecting the Finance Minister's announcement is housewives. Arun Jaitley's major announcements on dearer and cheaper will have a direct impact on the Indian housewives that has been toiling to maintain the kitchen budgets.
Housewives have been for long economising on their kitchen expenses owing to exorbitant prices of essential items. The government's announcement on food products can be of great respite to them.
The Finance Minister's announcement on consumer durable such as refrigerators and washing machines will also be appreciated by the homemakers since they are ultimately responsible for the running and maintenance of most of the household goods.
Students have to bear the brunt of higher loan regime. They feel that nowadays it is easier to buy a car than availing education loan in India. The loan rates are also different in various banks. The high rate of education loan sometimes discourages students to pursue their further studies. Government should think of students because they are the future of this country. The loan rates should be substantially reduced.
The farmer community has huge expectations from Arun Jaitley's budget. Expectations are high that the finance minister will increase minimum support price (MSP) for crops to match the cost of production and increase profit margins. Farmers also expect easy credits from banking and government institutions.
Expectations on infrastructure growth, free or more subsidised electricity, better irrigation facilities, better system for cold storage to prevent wastage, improvement in rural transportation is also high. The farmer community also expects that the finance minister will allocate funds for investments in modern farming.
