Union Budget 2018-19 Expectations

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Budget2018-19Expectations

• 10 Recommendations for the cbdt in respect of
  personal taxation matters

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Budget Expectation 1

• Salaried persons are allowed to claim tax
  exemptions for the Leave Travel Allowance
  received by them from their employer if they go
  on vacation anywhere within India. This exemption
  is still allowed only for vacations within India.
• The travelling cost to visit some overseas
  destinations is cheaper than visiting tourist
  destinations in India. Therefore, it is
  recommended that the exemption should be allowed
  for both Indian destinations and foreign travel.

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Budget Expectation 2

• Currently, an employee can claim deduction up to
  Rs. 15,000 for reimbursement of medical expenses
  obtained from the employer. This limit of Rs.
  15,000 was introduced way back in the year 1999.
• In the last 18 years, cost of medical treatment
  has increased manifold but exemption limit has
  never been revised. It is recommended that the
  exemption limit on medical expenses should be
  raised to at least Rs. 50,000 per annum.

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Budget Expectation 3

• Section 80C allows deduction of up to Rs.1,50,000
  in respect of payment for life insurance
  policies, repayment of housing loan, PPF,
  childrens education expenses, so on and so
  forth.
• The threshold limit under this section in only
  Rs.1,50,000 which generally gets exhausted and
  very little money is left for investment in other
  schemes.
• Therefore, it is recommended that maximum
  deduction under Section 80C should be increased
  to Rs.2,50,000.

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Budget Expectation 4

• The amount invested in FD with a maturity of 5
  years or more qualifies for deduction under
  Section 80C. Interest received on such FDs is
  charged to tax in the hands of the investor.
• Since many banks have substantially reduced the
  rates of interest on FDs, the net return on
  investment after taxes is inadequate.
• Therefore, interest accruing on FDs up to
  reasonable threshold limit should be exempted
  from income-tax.

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Budget Expectation 5

• From the last four years, basic exemption limit
  has remained same, i.e. Rs. 2.50 Lakhs.
• This year Government should increase the
  threshold limit.

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Budget Expectation 6

• Employees switching jobs are often required to
  pay sum amount to the employer for not serving
  the entire notice period. It is a double whammy
  for the employees as they are required to pay the
  money to the employer they are also not allowed
  to claim the deduction for such payment.
• In a recent case of NandinhoRebello v. DCIT
  2017 80 taxmann.com 297 (Ahmedabad Trib.),
  the Tribunal held that tax shall be levied only
  on actual salary received by an employee.
• Therefore, it is recommended that Section 16 must
  be amended suitably to allow deduction of notice
  pay.

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Budget Expectation 7

• Section 54 and 54F of Income Tax Act provides
  very little time to the taxpayers to invest in a
  new house. It allows up to 2 years to purchase a
  property and 3 years to construct it. Generally,
  for big project or township, the developers take
  minimum 5 years before handling over the
  possession of the property to the buyers.
• In that case, if a buyer gets the possession of
  new house after 3 years, he is not allowed to
  claim Sec. 54/54F exemption.
• Therefore, suitable amendment is needed to allow
  section 54/54F exemptions to genuine taxpayers
  who invest in a project developed by a builder
  registered under RERA.

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Budget Expectation 8

• Till financial year 2004-05, an additional
  deduction, i.e. standard deduction, was available
  explicitly against salary income. It was
  withdrawn from assessment year 2006-07.
• There are various expenses that an employee
  incurs during the course of his employment for
  which no deduction is available to him. As per
  return filing statistics, maximum number of
  returns have been filed in Form ITR 1, which is
  generally used by salaried persons and pensioners
  to file their annual return of income.

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Budget Expectation 8 (Contd.)

• Salaried employees are always considered as one
  of the main contributors towards direct taxes.
  Govt. should allow some additional benefits to
  the salaried employees by reintroducing the
  standard deductions type of provisions.

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Budget Expectation 9

• There are several allowances which are allowed to
  an employee by his employer which are exempt from
  tax up to certain threshold limits.
• These threshold limits are too insufficient as
  they were never revised, inter-alia,
  Children-Education Allowance is exempt up to
  Rs.100 per month, hostel expenditure is exempt up
  to Rs.300 per month, etc.
• The Govt. should immediately increase the
  threshold limits of these allowances and link
  them with inflation index.

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Budget Expectation 10

• An employee is allowed exemptions from House Rent
  Allowance if he is paying rent for his
  residential house. Higher deductions are allowed
  to employees who are in four metropolitan cities,
  i.e. Mumbai, Delhi, Kolkata and Chennai.
• The rental charges for a house in cities like
  Bengaluru or Hyderabad are not less in contrast
  to aforesaid 4 metropolitan cities.
• Therefore, Govt. should also include many other
  cities in the category of higher exemptions for
  HRA in cities like, Bengaluru, Hyderabad, Pune,
  Ahmedabad, Jaipur, Noida, Gurgaon, etc.

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