Wishlist For Union Budget 2018-19

The Union Budget 2018-19 will be presented by Finance Minister Arun Jaitley, on February 1^st 2018. You must be eager to know what's in this Budget. Unfortunately, you will have to wait till February 1^st, to find out what's in the Budget.

There's no harm in getting your wishlist ready. You can make an educated guess or better still, state what you want from the Budget and hope the Finance Minister hears you and grants your wish.

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Wishlist For Union Budget 2018-19

Let's take a look at what this Budget may hold for home buyers, the insurance sector, Financial products which help in retirement planning and of course...Equity mutual funds and shares.

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1. Wishlist for home buyers

Separate deduction for EMI Principal on home loan

 A separate deduction for EMI (Principal) on home loan. The Section 80C deduction of Rs 1.5 Lakhs is not enough.

Deduction for interest paid on home loans must be hiked

Income tax deduction for interest paid on home loans on a self-occupied property, can be claimed up to Rs 2 lakh per year under Section 24. It needs to be hiked to Rs 3 Lakhs.

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Extend Section 80EE beyond March 31^st 2017

First-time home buyers get an additional deduction of Rs 50,000 a year, over and above Section 24, under Section 80EE, only if home loans are sanctioned between April 1^st 2016 to March 31^st 2017. This deduction needs to be extended beyond March 31^st 2017.

Section 80EE benefits for property above Rs 50 Lakhs

 Section 80EE benefits are available only if the property costs are under Rs 50 Lakhs. Properties in tier 1 and tier 2 cities are very expensive. This limit must be hiked.

2. Insurance Sector needs some benefits

Home Insurance premiums must get tax deductions

Home insurance plans must be made compulsory for house owners. The premiums on home insurance plans must enjoy tax deductions.

Life insurance must enjoy a separate tax deduction

Life insurance enjoys a tax deduction on premiums paid under Section 80C, up to Rs 1.5 Lakhs a year. This is a collective deduction shared with other tax saving investments.  A separate deduction of Rs 50,000 a year on premiums paid for life insurance plans would be good. If not, at least a separate deduction for term life insurance plans.

Remove GST on health insurance and term life insurance plans

Health insurance and term life insurance are very critical for the common man. They fall in the 18% GST Slab. It would be good if health insurance and term life insurance is made GST tax exempt.

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3. Retirement Plans must be promoted

Bring NPS under EEE Regime:

PFRDA wants EEE (Exempt Exempt Exempt) status for the National Pension Scheme (NPS), from the current EET Regime to bring it on par with EPF. Currently, when you withdraw NPS Corpus at retirement, 40% of the corpus has to be compulsorily utilized to buy an annuity. Out of the remaining 60%, 40% is tax-free, but 20% is taxed. When a person withdraws NPS at maturity, he will most probably be in the highest tax slab. (30%).

Bringing NPS under EEE, means maturity withdrawal is tax-free and NPS can compete with EPF.

4. Something for the Stock Market

LTCG Benefits on equities must be retained

Currently, LTCG on equities (equity mutual funds + stocks) is zero, if you stay invested for one year or more. There is talk that in this Union Budget, LTCG on equities will lose tax-free status. With several domestic investors pumping money into equities, removal of LTCG tax benefits will push investors away from the stock market.

Include hybrid funds under Section 80C

Investors put money in 5-year tax saver FD to save tax. With interest rates falling, it would be good if hybrid schemes are introduced under Section 80C. Hybrid schemes invest in equities giving higher returns and the debt portion protects your investment. First-time investors could be encouraged to invest in hybrid schemes by giving Section 80C benefits with a 3-year lock-in like ELSS.  Be Wise, Get Rich.