The most awaited time of the year is approaching i.e union budget. Like every year, finance minister of India will soon present the union budget in the parliament which will reflect the overall financial health of the government. Apart from disclosing the picture of income and expenditure of the government, budget also come up with the fiscal policy changes for the next financial year. The plans and estimates prepared for the next fiscal year are also get announced in the budget and this is the key which attract people as these announcements can affects them in one or other way.
Being a salaried person what do you expect from this union budget i.e budget 2013-14?
Raise Income Tax Deduction Limit For Investments – From Rs 1 Lakh to 3 Lakh
Individuals are hoping that the tax deduction allowed to individual tax payers on different investment schemes which falls u/s 80C like PPF, ELSS, NSC, Life Insurance Policy etc. will be raised to Rs 3 lakh from Rs 1 lakh per annum. It was highly expected last year that the investment limit will increase but there were no such change announced in the budget 20112-13 but this year looking at the different aspects like inflation it is expected that the limit will be raised to Rs 3 lakh.
Higher Deduction For Education Expenses/ Loan
Education expenses is going higher day by day, the expense for higher education is even higher. So to reduce some level of financial burden, government offers tax deduction on education expenses. Currently there are two tax deduction available, one is for children tuition fee paid in university, college or school u/s 80C and other is deduction on account of interest on loan taken for higher studies of a family member u/s 80E. Although there is no limit on tax deduction on the interest paid on education loan whereas there is no deduction available on the principal amount of education loan.
Looking at the cost of education, there should be an independent tax deduction on education expenses of children or other family members, as tax deduction allowed on tuition fee u/s 80C is not sufficient.
Increase Limit Of Medical Expense Reimbursement
Medical expense reimbursement is claiming money from the employer against the medical bills which incurred for the treatment of employee or one of the family member. A salaried employees can get there medical bills reimbursed from the employer but the money received from the employer against the medical bills will be non taxable upto Rs 15,000 only. Which means if you received Rs 30,000 from your employer against the actual medical bill then Rs 15000 will be non taxable in your hands but you will have to pay tax on the rest Rs 15000.
Looking at the current medical & hospital expenses the limit of Rs 15000 set by the government is far less than the required limit as this limit was last revised almost 14 years ago. So a revision in this limit is very much expected in budget 2013-14.
Increase Deduction Allowed On Home Loan Interest
The tax deduction allowed on home loan interest is upto Rs 1,50,000. Which means if you have a home loan and you pay regular EMI then you can claim deduction upto Rs 1,50,000 per annum against the interest you pay for your home loan u/s 24(b). Considering the rise in the price of property and the rate of interest on housing loans, the limit of deduction offered is less. The property become double its value in last few years and the rate of interest on housing loan has also raised quite high but the deduction allowed on home loan interest has not been revised by the government. So it is very much expected that the deduction limit may get raised in the budget 2013-14.
Deduction On Time/ Fixed Deposit Interest Income
In the budget 2012-13 interest income earned from the saving bank account upto Rs 10,000 had been exempted from tax. Which means if you earn interest on your money lying in your saving bank account, then the interest earned upto Rs 10,000 will not be taxable. Whereas there is no such liberty given on the interest earned from fixed deposits (FDs). So to encourage people to save more for a long term there should be some tax concession on deposits made under time deposit scheme for a fixed period of time say 3 years.
Increase Tax Exemption On Transportation Allowance
The transport allowance given by an employer to the employee for meeting the expenses to commute from home to office or for the purpose of office work is exempt from tax upto Rs 800 per month i.e Rs 9600 p.a u/s 10(14) of the income tax act 1961. Looking at the current transportation expenses due to high fuel prices this limit should be be reconsidered and raised to the level of actual conveyance cost.
Increase Tax Exemption On Education Allowance In Salary
Some of the employers offer education allowance for the education of the employee children’s. Government offers tax exemption on the education allowance granted by the employer to the employee. The tax exemption offered by the government is Rs 100 per month per child up to maximum of two child is exempted if expenses made in India. Looking at the cost of education this limit should be raised to a level of realistic cost.
There should be some deduction available to salaried employees for the expenses connected to there salary income like people from business and profession get. Earlier this deduction was there but in 2006 government removed this deduction.
No Increase In Tax Slab
In the budget 2012-13 government of India raised the tax slabs so changes in the tax slabs are not expected in this budget. The tax slabs for FY 2012013 is:-
|RATE||MEN / WOMEN||SENIOR CITIZENS
(60 Years And Above)
|Very Senior Citizens
(80 Years And Above)
|0%||Upto 2 lakhs||Upto 2.5 lakhs||Upto 5 lakhs|
|10%||2 lakhs – 5 lakhs||2.5 lakhs-5 lakhs||NIL|
|20%||5 lakhs – 10 lakhs||5 lakhs-10 lakhs||5 lakhs-10 lakhs|
|30%||10 lakhs – Above||10 lakhs – Above||10 lakhs-Above|