Hon’ble Finance Minister Nirmala Sitharaman will present her second Union Budget on February 1st, 2020. As the union budget is yet to be presented, the anxieties among the common people and corporates have increased about the declining growth rate, dipping private investment, decreasing domestic demand, jobs crisis and rising inflation in Pre Budget Expectations have set the tone for the present economic discourse.
Let’s come on some key points that we hope to hear in the upcoming Budget 2020.
The tax slabs for the middle class and unorganized sector needs to be rationalized. It will help infuse more money for individuals and MSMEs that will further augment consumption and demand, which will lead to giving a push to economic activity. This announcement is overdue and it is on the top list in the common man’s wish.
Section 80C provides tax deduction on the life insurance premiums paid during a financial year. The tax deduction limit of 1.5 lakh available under section 80C has not kept pace with the rising inflation in the country. It requires reconsideration from a long time and an increase in limit under this section will certainly give a push to investments and more savings for taxpayers.
The present limit of Rs 1,50,000 should be revised from Rs 1,50,000 to Rs 3,00,000, since the existing tax deduction limit proves to be insufficient with both short-term and long-term investments.
Section 10(10D) requires revision and the minimum sum assured to 10 times of annual premium would be an advisable move. Under this section, you will get the tax deduction on the maturity proceeds of life insurance policy.
A move to increase tax deduction limit u/s 80C & 10(10D) will pave the way towards the growth of the Life Insurance sector. Additionally, it will help increase the security net for your family.
The government is focusing on providing tax relief to various housing schemes. In the union budget last year, Rs 1.5 lakh tax benefit has been provided to affordable houses and this time, it is expected to increase this tax exemption limit to Rs 75 lakh.
In this Union Budget, people are expecting from the government to give relief on LTCG (long term capital gains) tax and DDT (dividend distribution tax). At present, an Indian company needs to pay 20.56% (approx.) DDT on the declaration of dividends which are exempt for the shareholders. In this budget, the government is expected to abolish DDT which is otherwise taking the share directly from their earnings.
LTCG was introduced in budget 2018 which makes it mandatory for an investor to pay a 10% tax on profit made exceeding 1 lakh during a financial year. In this upcoming budget presentation, there is Pre Budget Expectations to increase the exemption limit from Rs 1 lakh to Rs 2 lakh.
An employee can claim the exemption for leave travel allowance allowed to him/her by the employer when going on vacation in India. People are expecting from the government to provide the LTA benefit for foreign travel as well.