The salaried people in India are hoping that there would be some relief for then in this year’s budget.
At a recent investor seminar, our finance minister, Mr. P Chidambaram, had hinted at relaxing the basic tax exemption limits.
Such a move will definitely help the salaried employee the most by enabling him to have more disposable income for his expenses.
I believe the following to be the top 5 expectations from a salaried employee from the 2013 budget:
- The basic tax exemption slab of Rs. 2 lakhs shall be increased to Rs. 2.5 or 3 lakhs. With this increase, our salaried class can save a lot of money and can further increase their purchasing power.
- One of the main components of salary is Transportation Allowance. This allowance should hopefully be increased in this budget. Tax free transport allowance is restricted to a maximum of Rs. 800/- per month or Rs. 9600/- per year. Considering the fact that there has been a fuel price hike since a number of years, transportation in India has become very costly and travel fares have been corrected many times. Therefore, it is imperative that this amount of Rs. 800/- per month be increased to something more acceptable to our general public.
- Now-a-days, a very heavy expense for any salaried employee is medical expenses. Currently, medical allowance to the extent of Rs. 15000/- per year is completely exempt from tax. However, considering the medical facilities that are now available in India and the costs associated with those, Rs. 15000/- per year will not be sufficient for even a family of 2 people. It is important that this figure be increased to at least a minimum of Rs. 20000/- so as to provide some more relief to the salaried employee. This current medical allowance exemption should be increased so that our salaried employees can save more tax while providing for good medical attention for their family.
- The interest amount paid on a home loan is exempted up to Rs. 1.5 lakhs only. This amount should also be increased as this exemption was brought about in 2001’s budget. But post this, in the last 10 years, property prices have gone up quite substantially in India. So considering the current prices of real estate in India, this miniscule exemption amount also should be increased to give all Indian individuals more freedom to buy their desired home and save more tax.
- So far an individual can only save up to Rs. 1 lakh under Section 80C. This limit is very less and has been at this limit since very long. Today, individuals salaries have gone up to a large extent, however the tax savings on such amounts are restricted. Let’s take for example an individual who is in the highest tax bracket of 30.9%. This deduction amount of Rs 100000/- under Section 80 C will lead to a maximum tax saving of Rs. 30900. This amount will not have much meaning to an individual whose salary runs in to lakhs of rupees. This limit should at least be enhanced to Rs. 150000/- and our Government should provide more tax saving options on Investments, Insurance and Pension Plans within this section.
These are few more expectations from the public which our Govt. is probably aware of and is also thinking of implementing to provide more taxation relief to our Indian tax payers. There might be many more things that can be added to this list, but if the aforementioned changes take place in this Union budget 2013-14 then our salaried employees should definitely be overjoyed as it will be a move
in the right direction.
Author Bio :
Aashish Ramchand is Co-founder of an e-filing and online tax advisory website. A chartered accountant by profession and passionate about Indian taxation advisory and love to write about the Indian tax system and its various nuances. He suggests to visit www.makemyreturns.com for more information.Google+