An increase in the income tax bracket is overdue and it’s something that every salaried individual wants in every Union budget.
“Last year, the newly introduced tax slabs with conditions are not working for many taxpayers,” said Harshad Chetanwala, co-founder of MyWealthGrowth.com. “At the same time, inflation continues to be on the higher side and there is a possibility of growth in income of salaried individuals to be limited in the coming financial year. This will have a major impact on their financial situation. The increase in tax slab limit can improve consumption as there will be more disposable income at salaried individual’s end. Over last few years, even the standard of living is constantly improving and so has been the cost of living in most of the cities.”
As far as tax rebate is concerned, a higher deduction under Section 80C to avail tax deduction will be a welcome relief because this will encourage more salaried taxpayers to save and make long-term investment. Providing additional tax benefit for new home buyers during the coming financial year in the form of higher tax rebate on interest repayment will encourage a segment of salaried individuals to buy a home.
The Union government should consider increasing the additional deduction limit for individuals from ₹ 50,000 to ₹ 100,000 or ₹ 150,000 when it comes to NPS, he added. “Today, Section 80C limit of ₹ 150,000 is not enough for many taxpayers to save tax. Increasing NPS limit for additional deduction will help people to save tax and encourage long-term investing. Also, the government should look at making it EEE (Exempt Exempt Exempt) from taxation perspective. At present NPS account holder can withdraw 60 per cent at vesting age which is tax free and remaining 40 per cent is to be invested compulsorily in annuities,” Mr Chetanwala said.
Medical expenses are increasing every year in India and need for higher health insurance cover becomes very important. Higher exemption limit under Section 80D for health insurance premium will bring relief on tax as well as encourage people to opt for adequate health cover.