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Key Expectations From Union Budget 2020

The countdown for the Union Budget 2020 has begun. From a taxpayer to a tax expert, everyone has got some expectations from Finance Minister Nirmala Sitharaman. We talk about expectations and recommendations from individuals for the Union Budget, 2020.

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  1. More relief to individual taxpayers

The basic exemption limit should be increased to Rs 3 lakh for an individual taxpayer and Rs 3.5 lakh for resident senior citizens and Rs 6 lakh for super senior citizens.

The taskforce, constituted by the government to draft new tax laws, has also recommended rationalisation of the personal tax rate. It has recommended five tax brackets of 5 per cent, 10 per cent, 20 per cent, 30 per cent and 35 per cent

  1. Increase in threshold limit of section 80C to boost investments

It is recommended that the deduction under Section 80C should be increased to a minimum of Rs 200,000 as per Section 80C that allows deduction not only in respect of investments but also expenses that we incur in our day-to-day lives such as tuition fees, housing loan principal repayment.

  1. Higher deduction for housing loan

It is recommended that the government should promote the housing sector by giving higher deduction for interest on housing loan and consider increasing the limit to Rs 250,000 for one self-occupied house property and Rs 300,000 for two self-occupied house properties.

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  1. HRA: add more cities under metropolitan's umbrella

As of now, higher deductions are allowed if the employee is living in any of the four big metropolitan cities like Mumbai, Delhi, Kolkata and Chennai. Currently, the rental charges for a house in cities like Bengaluru or Hyderabad are equal to or higher than what it is for a tenant in Delhi. Therefore, there is an urgent need of inclusion of many other cities in this category like Bengaluru, Hyderabad, Pune, Ahmedabad, Jaipur, Noida and Gurgaon.

  1. LTA for foreign travel

An employee is entitled to claim exemption for the leave travel allowance granted to him by his employer for the purpose of going on a vacation anywhere within India. This exemption is still allowed only for vacations within India. It is recommended that the exemption should be allowed for both Indian destinations as well as for foreign destinations.

  1. Deduction in respect of interest on deposits in case of senior citizens

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It is suggested that income by way of interest on National Savings Certificate also be included within the ambit of provisions of section 80TTB, so that senior citizens who have purchased NSCs from post offices are also able to avail the benefit of enhanced deduction under section 80TTB.

  1. Income of minors - to increase exemption limit

At present income of minors included in the hands of parents is exempt to the extent of Rs 1,500. The average expenditure to meet the cost of a minor's education, health, living expenses, which have gone up considerably in recent years is woefully inadequate. It is suggested that this should be raised to at least Rs 5,000 for every minor.

  1. Need for clarity on TDS on family pension

There are so many cases relating to confusion on TDS on family pension. Some deductors deduct tax u/s 192 as salary but being the fact that the person who is getting the pension is not an employee of the organisation. Others deduct tax u/s 194A for avoiding any difficulties in ITR filing of the person getting the pension. There must be a specific provision for TDS on family pension.

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 The author is Group Head Taxation with SIS India 

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