Spring is the season of hopes and aspirations. Traditionally, it is the time to rejoice after a good harvest and is also celebrated because of the festival of colours - Holi. This is also the period when an individual looks back at the year gone by and evaluates his family's financial requirements. The common man waits for the finance minister's announcements to determine if and how it will dent his pocket. This would include both the direct tax proposals that could reduce his take home as well as indirect tax changes that will impact the cost of goods and services. There are indications that railway fares may get increased. In such a scenario, any income tax concessions would neutralise the impact.
As the introduction of the Direct Taxes Code (DTC) is further deferred by atleast another year, one would hope that some of the incentives proposed in the DTC Bill get captured in the current budget. These may include:
* Increasing the threshold limit from the current amount of Rs. 180,000 to Rs. 200,000. There are reports that the Parliamentary Committee reviewing the DTC provisions has suggested a higher limit of Rs. 300,000 for taxation to begin. This would be welcome as any such enhanced limits could take many individuals away from the tax bracket while relieving the pressure on many more.
* Re-introducing the standard deduction for the salaried class. This would bring smiles back on the faces of the working class that do not have the benefit of expense deductions that a business person enjoys.
* Deleting the deemed let out concept. The deemed let out concept does not find a mention in the DTC bill and one would expect that the finance minister would include such deletion as part of his budget proposals.
* House property loan and tax benefits. The limit for deduction on interest payable on loan borrowed for property construction/acquisition was fixed a decade back and it is only fair that this is revised in line with the increased costs in the real estate sector and borrowals. These would provide the much-needed impetus to the growth of the Indian real estate market.
At present, the principal repayment for the loan is also covered within the overall limit of Rs. 100,000 for deduction from total income under section 80C. It will create positive vibration if this repayment is provided as an additional deduction over and above the specified limit.
* We often hear the finance minister say in his budget speech that various investments are brought within the eligible ambit for deductions to promote savings among the common man. However, the upper limit for such deductions has not been revised for a long time and any increase would be welcomed.
* Individuals would also welcome other incentives such as enhanced medical reimbursement deduction, increase in deduction for investment in infrastructure bonds etc.
Will the finance minister ease some of the inflation stress of the common man? Will he propose alternative measures to ensure a comfortable experience on individuals' tax compliance and assessment? Will the proposals bring new hope for the country's working class?
March 16 will answer these questions.
(The writer is manager, Deloitte Haskins & Sells. Views expressed are personal.)