The Budget Session 2016 will commence from February 29th and individual taxpayers are waiting with high hopes. While Finance Minister Arun Jaitely has already made it clear that it is not going to be a populist budget, revisions are expected in the areas where changes are overdue.
There is a demand for extension of the basic exemption limit from the current INR 2.5 lakhs to INR 3 lakhs for assesses below 60 years of age. If the proposal goes through, a corresponding increase will apply for senior citizens in both categories (60-80 years and 80+ years). Under the Income Tax Act, the primary tax saving tool is the deduction section 80C, which currently has a ceiling of INR 1.5 lakhs. This limit may be revised to INR 2 lakhs, particularly because this section includes too many options. Individuals in higher income brackets do not get benefits for higher savings under the current system and therefore, there also has been a demand for some years to rationalize this section.
Due to high property prices in Tier I and Tier II cities, the interest burden has also increased and home buyers are looking for a higher deduction for interest repayments under section 24B. The principal repayment falls under section 80C, limiting the tax benefits on home loans even further. For a self-occupied property, the limit u/s 24B is 2 lakh if the property is constructed within 3 years. For rented property, there is no upper limit.
This year Assocham is batting for the female workforce. In its pre-budget memorandum, the association proposed tax incentives for crèche provisions for working women. The Memorandum also highlighted that the children education (INR 100 per child) and a hostel allowances (INR 300 per child) u/s 10(14) were last set in 1988-89 and must be revised 10 times to INR 1,000 and INR 3,000, respectively. A new allowance of up to INR 2,500 per child for maximum two children is also recommended. It also mentioned that current medical reimbursement limit of INR 15,000 u/s 17(2) was set 17 years back and should be revised to INR 50,000.