10 things you can expect from Budget 2017
In a surprising move late last year, the Finance Ministry had brought forward the presentation of the annual Union Budget to 1st February. With barely a few days to go for the big day, there are huge expectations from the Union Budget. But will the budget be pro-common man or suit businesses? Here is a list of 10 things you can expect from Budget 2017.
1) Increase in minimum taxable income
Following demonetisation, media reports suggest a hike in the income tax exemption limit. The minimum taxable income level at present is Rs.2.5 lakh. It is rumoured that this could rise by Rs.50,000 to Rs.3 lakh.
2) Revision of tax slabs
In the wake of a statement by Finance Minister Arun Jaitley, there could be an upward revision in the income tax slabs. The revision may be due to the government collecting higher revenues through cashless systems.
3) Revision of allowance limits
Salaried individuals may be able to avail many exemptions on income tax under different sections. These include medical reimbursement and education allowance for children. But it has been a long time since the upper limits on these exemptions were modified. With the current state of inflation, these exemptions serve little purpose to taxpayers. So, a revision of the allowance limits on some exemptions is likely.
4) 80CCF deduction on infrastructure bonds
The upcoming budget might restore deductions for investments made in long-term infrastructure bonds. This would apply under Section 80CCF. This deduction was available for the financial years 2010–11 and 2011–12. It was then discontinued. At the time, the deduction was capped at Rs.20,000 for these investments. The Federation of Indian Chambers of Commerce recommends continuing this deduction as it is expected to benefit investors.
5) Increase in upper limit for insurance premium deductions
Insurance premiums can be very high — especially if parents are included in the plan. At present, the deduction for insurance premiums under Section 80D is capped at Rs.55,000. Salaried individuals would welcome any increase in the upper limit for deductions. This would help them save a substantial amount in yearly taxes.
6) Benefits for real estate sector
Implementation of the Real Estate Regulatory Act (RERA), coupled with demonetisation, led to a poor run for real estate. But the budget might bring some good news. Standardisation of construction material costs is likely, say trade pundits. There may also be a hike in the HRA deduction limit.
7) Housing loan tax deductions
The government has introduced schemes like the Prime Minister Awas Yojana (PMAY). It wants to provide affordable housing for everyone. So, the budget could offer tax concessions on housing loans. Many believe that the tax deduction on interest paid on housing loans might increase. The current value of this deduction is Rs.2 lakh.
8) Relief for farmers
The budget announcement might cheer up farmers across the country. This would be especially helpful after their poor run due to demonetisation. The note ban had made it difficult for farmers to sell their rabi crops on time. The government is likely to offer several benefits to farmers as relief. Greater access to cashless transaction facilities is also on the cards.
9) Changes in 80C deductions
It has been three years since the deduction limit under Section 80C was set at Rs.1.5 lakh in 2014. There has been much speculation about a hike in this limit to combat the rise in the cost of living. Many are expecting an increase to Rs.2 lakh.
10) Corporate tax rate
The Finance Minister indicated that the budget will provide a road map for reducing the corporate tax rate. The rate is likely to be cut from 30% to 25%. This change will happen gradually over the next few years. This is good news for corporate organisations and investors alike. It would boost investment sentiment across the industry. Further, the budget is likely to incentivise digital transactions among businesses.
The bottom line
Demonetisation was a bold move by the government to curb black money. But it has had a big impact on the Indian economy. Going forward, a lot is riding on the upcoming budget. It is possible that the budget will bring some cheer for the common man and the corporate world.