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What an Individual taxpayer is expecting from Union Budget 2019

July 1, 2019 889 Views
Sameer Mittal
Managing Partner, Sameer Mittal & Associates LLP

NDA 2.0 is ready to release the full budget on July 5 under the leadership of new finance minister Nirmala Sitharaman. Considering the trust placed by the people on NDA there are lot of hopes and expectations also from the government. As per us, government may consider to provide the below benefits to the Individual taxpayers:

(a) Revision in the Income-tax slabs

As per the provisions of the Act, at present higher tax slab i.e. 30% is applicable over and above income of Rs.10 Lakhs however in the other nations higher tax slab applies on much higher income. We expect that there should be relaxation in the highest tax slab i.e. applicable on income above 10 lakhs. Government may also consider that Tax slab of 30% should be triggered at income above 20 Lakhs instead of Rs.10 Lakhs.

(b) Reduction of Surcharge in case of Individuals

According to the provisions of the Act, surcharge is levied on the amount of tax when the income crosses the threshold however benefit of marginal relief is also available.

At present Individual is already paying tax in highest tax bracket when the income exceeds Rs.10 lakhs, hence surcharge which is 10%/15% as the case may be has to be removed or reduced equal to the surcharge applicable to corporate.

Hence, in case of individual taxation, surcharge will be removed or levied at reduced rate

(c) Increase in limit of various salary related exempted allowances

According to the provisions of Income Tax Act, many allowances are exempted in the hands of employee subject to a prescribed limit however that limit were decided decades ago.

Example: At present conveyance allowance is non-taxable up to Rs.1,600/- per month and education allowance allowed Rs.100/- per month and hostel allowance Rs.300/- per student up to a maximum of 2 children which is not sufficient considering the cost inflation index hence this should be increased.

Hence, we expect relaxation in the various limit of allowances considering the cost inflation indexation.

(d) Deduction in respect on interest on deposits in Saving Bank

At present deduction under section 80TTA is provided Rs.10,000/- and for senior citizen deduction of Rs.50,000/- is provided under section 80TTB introduced by Budget,2018.

Government should increase in the deduction limit under section 80TTA.

(e) Benefit for Senior Citizens

Currently in the National Pension Scheme, it works on Exempt, Exempt, Tax (EET) regime wherein the terminal benefits on exit or superannuation, in the form of lumpsum withdrawals (20%) are taxable in the hands of the taxpayer in the year of receipt of such amount in the National Pension Scheme. In order to encourage taxpayers to make the higher contributions, this should be relaxation from the tax perspective and government may consider to make NPS regime as Exempt, Exempt and Exempt (EEE) from the current EET regime.

(f) Changes in presumptive taxation in case of professionals

According to the provisions of section 44A of Income Tax Act, any person resident of India and having income from profession whose gross receipt in the previous year do not exceed fifty lakh rupees, a sum of equal to 50% or higher amount claimed by assesses will be deemed to be profits from such profession and chargeable to tax.

As this provision was introduced to providing relief to professionals in the small & medium segment however fails to achieve the same as the threshold limit of fifty lakhs appears to be low.

We are expecting relaxation in the threshold limit of Rs.50 lakhs to 1 Crore which will be helpful in achieving the objective of the provision.

Also, on the other hand, in case of professional's presumptive income is considered minimum 50% however, in case of businesses it is only 6% or 8%. Considering the competitive environment, government may consider to reduce the presumptive income in case of professionals.

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