Budget expectations - 1 : Direct Taxation

Interim Budget for FY20 will be announced on 5 July, 2019. Following items are market expectations on the direct taxation front:

Make 80C exemption limit higher - Section 80C limit has been at 1.5L for 18 years now with the number of investment eligible to claim this has increased. This limit should be enhanced to 2L to actually benefit more from planning of taxes and encourage investments. 

Increase limit on Sec 24 - The budget also needs to look at Sec 24 for interest paid on home loan. This limit can be increased from 2L to 3L to reflect the real estate prices in India

Rationlize tax slabs further - In the interim budget 2019, the income slabs were left untouched. Instead, for all individuals earning a net income of up to Rs.5 lakh, the tax liability was given back to them as a rebate. This can still be unfair to individuals whose income is slightly above Rs.5 lakhs as they end up paying a higher tax. Rather, the government can make income up to Rs.5 lakh fully exempt giving a huge relief to small tax payers.

No filing of income tax up to 5L - Government should consider filing no income tax returns for people earning up to 5L (rebates are there in any case till 5L). An increase in the number of filed returns in this category does not add much value to the tax revenues and just adding to process front of IT department. The focus should be more on tax efficiency. A form 16 or 26AS should be sufficient be sufficient.

In Conclusion, we do not expect big changes in the personal taxation front in the interim budget as the fiscal situation is tight. Minor tweaks though are entirely possible to spur investments and for better tax planning purposes.


Author Image


Recent Post

  • PC Jeweller Demerges its Expo..

    What’s the deal? PC Jewelers recently announced that it would demerge its Export Division and merge with its wholly owned subsidiary - PCJ Gems & Jewellery Limited. Company c..

  • Insurance- Introduction

    Risk and uncertainty are associated with life in some of the other ways. These risks and uncertainties are increasing daily because of the increment in the speed of life. For example, i..

  • Rail Vikas Nigam Ltd. IPO

      Offer Details Price band Rs 17-19 Per Equity Share Offer Open Date Mar 29, 2019 Offer Close Date Apr 03, 2019 Lot Size..

  • Tech Mahindra Buyback

    The Board of Directors of Tech Mahindra Ltd. approved a share buyback for its investors on Feb 21, 2019. The details of the buyback include: Ex-Date: March 5th, 2019 Record Date: Marc..

  • BHEL Buyback

    The Board of Directors of BHEL approved a share buyback for its investors on Oct 25, 2018. The details of the buyback include:  Record Date: November 6th, 2018 Buyback price: Rs...