The Union Budget 2018 is just a day away and everybody is waiting with bated breath to see what is in store for them. Arun Jaitley will present his last full budget as the Finance Minister of the 16th Lok Sabha, in all technical terms, before the Parliamentary elections in 2019.
To start with, there was some minor tweaking that was carried out in the previous budget, for income earners up to Rs 5,00,000, by reducing the tax from 10 percent to 5 percent, which left a lot to be desired by the common man. Given the same, policymakers may like to up the limit for lower slabs from Rs 250,000 to Rs 300,000, though the same may still be nowhere near to what was proposed in the popular ‘Direct Tax Code’.
Expanding the horizon of the 80C deductions is the need of the hour. The overall avenues for savings and investment are already limited and with low-interest rates offered by banks, the overall exemption limit needs a re-look to broaden the scope for savings.What has been also doing the rounds for a while and is long overdue is a revision in ‘standard deduction’. The standard deduction allows a flat deduction from salary income to make up for some of the expenses which salaried employees incur during the course of employment. Technically, salaried employees cannot claim deductibility of such expenses as opposed to individuals earning business income who claim expenses incurred in the ordinary course of the business.
The ever-rising inflationary levels and medical expenditure should surely induce policymakers to consider an increase in the exemption limit for medical reimbursement, from the current Rs 15,000 (brought in almost two decades ago) to Rs 30,000. Similarly, the deduction under Section 80D should also be increased from the current Rs 25,000 to ensure affordability and accessibility of medical treatment to all class of patients.
Technology has led to an awareness for all classes and even for the population staying in rural areas. Everybody wants to impart the best of education to their children and justifiably so. To keep in line with the same, the government should look at providing some relief in terms of increasing the education allowance and hostel allowance that stands at a paltry INR 100 and INR 300 per child per month respectively. Another aspect that needs a relook are the provisions relating to Leave Travel Allowance (LTA). With global travel now within desirable limits, it should surely get the nod of the government, with robust backup documentation. Also, restriction of LTA allowance to two years should be done away with and should be made available annually.
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