The Union Budget 2020 will be presented tomorrow. From the common taxpayer to the tax expert, everyone is talking about it. Let’s take a look at the expectations of the common man from the Union Budget 2020.
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If you are below 60 years there’s an income tax exemption up to Rs 2.5 Lakhs a year. Income between Rs 5 Lakhs to Rs 10 Lakhs is taxed at 20%. Most of the middle-class fall in this category and they desperately need an income tax rate cut.
The Finance Minister Nirmala Sitharaman must cut the income tax rate from 20% to 10% for income between Rs 5-10 Lakhs. This is a category that pays a lot in tax and seeks an income tax rate cut.
See Also: What to Expect From Union Budget 2020?
The Section 80C limit at Rs 1.5 Lakhs a year is too low. It must be hiked to at least Rs 2 Lakhs a year. Section 80C is a collective investment up to Rs 1.5 Lakhs. It’s too crowded and a separate deduction for term life plans and tuition fees for higher education is the need of the hour.
You get a tax deduction on home loan interest repayment up to Rs 2 Lakhs a year under Section 24. This must be increased to at least Rs 3 Lakhs a year. With home prices on the rise and bulk of home loan interest payments in the early years, the youth of the country badly want the Section 24 limit to be hiked from Rs 2 Lakhs a year to Rs 3 Lakhs.
You enjoy higher tax exemption on HRA (House Rent Allowance) on residing in a metropolitan city like Mumbai, Chennai, Kolkata and Delhi. The rental charges in cities like Bangalore and Hyderabad are similar to metropolitan cities. It would be great if these cities are included under metropolitan cities for HRA tax exemption.
See Also: Union Budget 2019-2020: Major Takeaways
Minor income which is included in parent’s hands is tax-exempt up to Rs 1,500 a year. Now, average expenses on health, education and minor’s living expenses is really high. This must be raised to at least Rs 5,000 for a minor.
The standard deduction of Rs 40,000 was introduced in Budget 2018. It was then increased to Rs 50,000. The common man wants the standard deduction to be hiked to Rs 75,000 a year.
The Government could consider doubling the Income Tax Deduction Limit on NPS under Section 80CCD(1B) from Rs 50,000 to Rs 1 Lakh a year. This encourages more youth to invest in NPS and save tax.
The maximum amount you can invest in PPF is Rs 1.5 Lakhs a year. The common man expects this to be hiked to Rs 2.5 Lakhs a year. The PPF enjoys the EEE benefit where you have the Section 80C deduction up to Rs 1.5 Lakhs. The interest and withdrawal amounts are tax free. An increase from Rs 1.5 Lakhs to Rs 2.5 Lakhs ensures a higher EEE benefit.
The Senior Citizen’s Savings Scheme is a boon to senior citizens. It offers the highest rate among all fixed income investments. SCSS interest is 8.6% a year. The SCSS interest is fully taxable. The senior citizens want SCSS interest to be tax-free.
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