Since Budget 2019 is also the last before the general elections, there are chances that there could be some measures to please the middle-class voters.
Expectations from the Budget on the personal tax front are mixed on account of the impending 2019 general elections.
Since Budget 2019 is also the last before the general elections, there are chances that there could be some measures to please the middle-class voters.
According to Kuldip Kumar, partner & leader, personal tax, PwC India, there could be a hike in the basic exemption limit (the limit beyond a person’s income is taxed).
“There are chances that the government will try to cheer the middle-class segment. Even in last year’s Budget the major changes were for senior citizens. The recent reduction of GST rates was targeted at businesses. The government could increase the basic exemption limit, which has not been changed since the last three years. Overall measures could be simple and straight forward ones that will affect more taxpayers,’’ Kumar said.
1. Basic exemption limit
)
"Increase in basic exemption limit from Rs 2.5 lakh to Rs 3 lakh, a higher basic exemption limit for women taxpayers to may be Rs 3.25 lakh and a hike in the limit for tax-saving investments under Section 80 C could be implemented in the Budget", kumar said.
2. Deduction for expenses on day care or house help
)
According to Archit Gupta, CEO and founder, Clear Tax, more than allowing a higher exemption for women, a better idea would be to allow them deduction for expenses on day care or house help.
An increase in the 80C investment limit of Rs 1.5 lakh to Rs 2 lakh is more likely since it has not been hiked since 2014-15. “This is due, given inflation and how crowded the basket has become. It definitely needs to be increased," Gupta said.
3. What experts think?
)
Tinkering with tax rates is not expected since Budget 2019 would be an interim Budget, said Suresh Surana, founder, RSM Astute Consulting Group. But there could be an increase in the basic exemption limit to Rs 3 lakh, keeping in view the inflation and the fact for the past couple of years the limit has not been increased.
4. Populist measures likely
)
Since it is a vote on account, it is difficult to say what could be announced, said Homi Mistry, partner, Deloitte India. “Some populist measures are possible since it is an election year. But at the same time there may be no announcement that will impact tax revenues. Already, some concessions have been given for GST,’’ Mistry said.
Although standard deduction was increased last year to Rs 40,000, the tax exemption for conveyance and medical allowance was removed. Hence, the net relief for taxpayers worked out to only about Rs 5,800, which was low. This limit could be increased this year, giving relief for the salaried class, Mistry said. (File Photo)
