Budget 2017: What’s in store on the personal tax front?
Due to existence of multiple SPVs under one large parent, one of the major compliance challenges faced is significant cost incurred for undertaking income-tax compliance.Apart from enormous compliance efforts and cost for the taxpayer, this also results into significant administrative cost for tax department in keeping track of and assessing multiple SPVs.union budget Updated: Jan 30, 2017 19:37 IST
It’s that time of the year when the common man gears up with bated breath on what to expect from the Union budget. With the recent demonetisation drive, there is a lot that is expected from the forthcoming budget in terms of sops and benefits. I am sure the common man while waiting in the long queues to withdraw their hard earned money,would have dreamt of some of these benefits.
There has been a lot of talk and speculation on the current exemption limit of Rs 2.5 lakhs being enhanced, in order to provide some level of breather in terms of taxes. Not only the exemption limit may get increased, but there is also an expectation of the revival of standard deduction which got abolished way back in 2006-07. Last time around the standard deduction was ranging between Rs 20,000-30,000. If at all it needs to be revived the same may get reinstated at a sum ranging between Rs 50,000- 75,000. The inherent intention of reintroducing standard deduction is to enhance the spending capacity of the salaried individual and also bring some level of parity with the business class, who enjoy the privilege of claiming the permissible expenditure as part and parcel of the overall business income.
In so far as the Chapter VI-A deductions are concerned the overall exemption limit of Rs 1.5 lakhs still seems to be fairly low given the fact, that large part of the population contributing towards Provident Fund get covered as part of the basic exemption limit, with very limited scope for other avenues to be explored.
There has been a lot of focus off-late on the infrastructure segment. The infrastructure bonds introduced in the past had gained a lot of popularity and had also given the much needed boost to the infrastructure sector. Such infrastructure bonds may see a reintroduction.
With a lot of focus in the past decade on the housing and education sector and the ever increasing cost in both the sectors the policy makers may consider providing separate deduction to the common man in terms of the tuition fee payment and principal repayment of the home loan to give a bit of cushion to the common man’s pocket.
Also, the National Pension scheme works on Exempt, Exempt, Tax (EET) model. For the scheme to gain more popularity and get in sync with Provident Fund which works on an EEE model, the EEE tag may see an introduction for the contributors to such Pension scheme.
Some others areas that have been in the pipeline and certainly forms part of the wish list of salaried class are the paltry limits pertaining to medical reimbursement, conveyance allowance, education allowance etc. The current limits prevalent under the law for sure need a rethink.
This is just a wish list of what is in the mind of the people and yes with the demonetisation drive, the common man would really be expecting some bit of it from the forthcoming Budget. Let’s wait and see what finally transpires.
The author is director of Deloitte Haskins & Sells LLP
First Published: Jan 30, 2017 18:03 IST