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Tuesday, January 24, 2017
Union Budget 2017: What the taxpayers want
The Union Budget is just around the corner. It will be presented by the finance minister Arun Jaitley on February 1. As always, there’s a flurry of speculation about what it has in store. Deloitte India's annual pre-budget survey gives an overview of taxpayers' expectations from the budget.
Raise basic exemption limit
Taxpayers are in favour of increasing the existing basic exemption limit of Rs 250,000. Raisnig the exemption slab will help widen the tax base and increase compliance. It will place more money in the hands of consumers resulting in increase in demand pick up.
Bring NPS under EEE regime
Currently, withdrawals made from NPS are taxed to the extent of 60%. However, this is not in parity with other pension schemes such as provident fund. To bring parity and incentivize employees to be part of NPS, it must be brought under EEE (Exempt Exempt Exempt) regime and made fully exempt from taxation.
Exemption for time deposits
Section 80TTA was introduced in Assessment Year 2013-14 to promote savings by providing for deduction on interest income earned on savings bank account. Currently deduction can be availed up to maximum of Rs 10,000 only in respect of saving account interest. Most taxpayers are in favour of increasing the scope of the deduction to include interest earned on time deposits and increasing the deduction to Rs 20,000, respectively.
Paying tax on deemed rent
Individuals who own residential properties, aside from their self-occupied home, have to pay tax on notional/deemed rent from the additional property. This means they have to pay tax on income they have not received. Majority of those surveyed said taxability of deemed rent on notional basis should be deleted.
Leave travel allowance
Currently, a tax exemption is allowed for actual expenditure incurred while travelling in India. Further the exemption is allowed only for two journeys in a block of four calendar years. More than 3/4th of the respondents are of the view that leave travel allowance exemption should be allowed per annum and should be extended for foreign travel.
Applicability of advance tax
Advance tax is applicable if the estimated tax payable exceeds Rs 10,000. Respondents felt that the threshold limit for advance tax payments should be increased, of which 36% felt that the limit should be increased to Rs 20,000.
Deduction for infrastructure bonds
The government has set an ambitious target to boost infrastructure spending and is in need of long-term funds. Deduction for investment in long-term infrastructure bonds will provide additional avenue for individuals to make investment and save taxes. At the same time, it will provide funds to finance various infrastructure projects. Majority of the respondents indicated that the deduction for investment in infrastructure bonds should be introduced with a limit of Rs 50,000.