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Budget expectations - 1 : Direct Taxation
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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.


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