Budget 2015 Wish: What Govt Must Do For 'Aam Aadmi'?

As February 28 draws closer, a lot of expectation has built up on the tax front as this will be the first full-year Budget to be presented by the Modi government. The government has previously conveyed its intention to simplify the taxation system and provide relief to taxpayers.

To start with, most taxpayers are expecting an increase in the exemption limit. The basic tax exemption limit for individuals should be raised from Rs. 2.5 lakh to Rs. 3 lakh.
As an incentive to working women, tax exemption for them, too, needs to be increased to at least Rs. 4 lakh. Additionally, the peak tax rate of 30% should be made applicable over an income of Rs. 20 lakh for individuals.

To boost infrastructure, the benefit of Section 80CCF — which provided for a deduction of Rs. 20,000 in computing total income for subscribing to long-term infrastructure bonds issued by government-notified companies — should be reintroduced.

The benefit of Section 80CCF of the Act should be restored and the deduction of Rs. 20,000 earlier provided be increased to Rs. 50,000. This would allow an assessee in the highest tax-bracket to save up to Rs.16,995. It is recommended that deduction be allowed on long-term infrastructure bonds issued by private companies as well.

The exemption limit under Section 80C was increased last year from Rs.1 lakh to Rs.1.5 lakh. Taxpayers are hoping for a further increase in 80C incentives to Rs. 2.5 lakh, which will boost investment and tax savings. Additionally, the government should provide a separate deduction limit of Rs.1 lakh for investment in various life insurance products.

Exemption on interest from housing loan should be revised upwards from Rs.2 lakh to Rs.3 lakh.

Exemption limit on reimbursement of medical expenses was set at Rs.15,000 in 1998. With the ever-increasing medical costs, a common salaried man expects the government to increase the limit to Rs.50,000 so as to bring it in line with inflation.

Also, deduction for mediclaim insurance premium could be increased from R35,000 (self/ family — Rs.15,000 and parents — Rs.20,000) to Rs.50,000.

Similarly, the exemption limit of transport allowance was set at Rs.800 in 1998. This should be increased to Rs.4,000 per month.

The education sector needs significant attention. The exemption limits of various allowances, such as children’s education and hostel expenditure — currently set at Rs.100 and Rs.300 per month — should be revised.

Considering that the monthly education expenses of children (allowed as deduction under the blanket deduction of Rs. 1.5 lakh) form a major portion of a family’s budget, the government should give a separate deduction for such expenses.