Budget 2016: Common man asks for more tax exemptions this year

Vaibhav Sankla
H&R Block
The Union Budget – more than a word, it is an event that is awaited by the whole country. The finance minister surely has his work cut out for him as he tries to meet the aspirations of many while at the same time keeping the country on a trajectory of growth while tackling the problem of inflation.

Well what exactly is the common man looking for in the Union Budget 2016?

Housing: Housing loans have certainly been a boon to the real estate sector making homes accessible to almost everyone eligible for one. The one thing that the common man is looking for though is to increase the current limit of the deduction for interest on housing loans from Rs 2,00,000. Also, there should be additional tax benefits for the payment of the principal loan amount which is currently included in section 80C of Income Tax Act, with the slab being raised from the current Rs 1.5 lakh. In metro cities where the property prices have sky rocketed this deduction can be increased from these current limits to provide a respite to persons who have availed huge housing loans ranging from Rs 50 to 75 lakh or more.

Deductions: In order to encourage savings and increase liquidity in the economy tax deductions under section 80C need to be revised. There should be an increase in the overall ceiling for deduction which is currently consolidated for all long term serving instruments, including provident fund, pension funds, and equity linked savings scheme etc. to an amount of Rs 1.5 lakh. The ceiling on deductions on life insurance policies, payments towards NPS and annuity plans which benefit pensioners also needs to be increased.

Essentials: With the high service taxes, excise duties, VAT and in some instances multiple taxes being imposed on certain products the price index of most commodities and services is high, the burden of which rests on the shoulders of the common man. A rationalization of these taxes and reduction of taxes on items like life-saving drugs, common food items etc is the need of the hour.

Allowances: The government grants tax exemptions on certain payments or allowances that the employer gives to the employees. These include travel allowance, children’s education allowance, hostel allowance etc. Given that these allowances have not been revised since 1997 and meanwhile cost of education, commuting etc have escalated, there needs to be an immediate upward revision of the tax exempt limit of the same.

Besides these there are several other points which appear on the common man’s wish list which include increase on tax deduction on medical insurance given the high costs of medical treatment, it’s a wait and watch situation to see which of these the FM fulfills.
Source : moneycontrol.com