Wish list of the salaried class from Union Budget 2013
Looking at the way medical and hospitalisation costs are increasing, this exemption too needs to be increased
While the country anxiously awaits the Union Budget 2013, what is the salaried class asking for?
As the countdown to the Union Budget comes to a close, here’s a wish list of salaried class, which has high expectations from our Honourable Finance Minister P. Chidambaram, who will be presenting the Union budget for the seventh time.
Upward shift in income tax slabs: The exemption limit of an individual taxpayer is INR 200,000/-annum. This limit was increased to INR 200,000/- annum last year from INR 1, 60,000/- annum. We hope the positive trend continues and this slab is increased to neutralise the impact of increased living expenses.
Increase in saving limit for investment: At present an individual gets an exemption of INR 1,00,000/- annum, under section 80c of the Income tax act 1961 for contributions in Provident Fund (PF), Life Insurance Premiums, Equity Linked Saving Schemes (ELSS), Unit Linked Insurance Plan (ULIP), Tuition fees paid for up to two children, National Saving Certificates (NSC) etc. In the absence of any social security scheme in India, and the consistent rise in cost of living, an exemption of INR 1, 00,000 on investments is miserably low and needs to be significantly revised.
Exclusion of tuition fees from the INR 100,000 cap: Tuition fees for pre primary to high school students range from anywhere between 40,000/annum to 150,000/annum for primary schools. The current exemption of INR 2,000/month which is included in the INR 1, 00,000/- exemption under section 80c is not in alignment with the ground reality. It needs to be excluded from the exemptions under section 80c, and the limits need to be substantially revised.
Increase in Conveyance Allowance: Considering the ever increasing fuel costs and the resultant increase in conveyance costs, the exemption limit of INR 800/month (INR 9,600/annum) that was decided in the year 1998 needs a significant upward revision.
Upward revision in Medical Reimbursement: Any expense incurred by the employee on medical treatment of self and family is exempt up to INR 15,000/annum as per section 17 (2) of the Income Tax Act. This limit was last revised almost a decade back. Looking at the way medical and hospitalization costs are increasing, this exemption too needs to be increased.
Increase in deduction limit of housing loans: A deduction up to a maximum of INR 150,000 is currently available from taxable income towards interest on housing loan as per section 24 (b) of the Income Tax Act. With substantial increase in property prices individuals contribute much more than the specified limits towards housing loans. To give some respite to the overburdened tax payer, the government can do with upward revision in this category too.
Revision in categorization of cities and exemptions in House Rent Allowance (HRA): A taxpayer gets an exemption of up to 50 per cent of basic for HRA if they live in a rented property in Type A cities (Delhi, Mumbai, Kolkata, Chennai). Whereas the tax exemption for Type B cities is 40 per cent of the basic for all other cities inclusive of suburbs such as Gurgaon, Noida and cities such as Bangalore. Rentals in suburbs are comparable to those of the cities they are in. For example: Rentals in Gurgaon are way higher than many parts of Delhi however the HRA exemption for Gurgaon is 40 per cent of the basic. Hence the Finance Minister needs to re look at the way cities are categorized.
The demands are not outlandish, but only time will tell if the Finance Minister is listening. With a day to go for the budget to be announced, we can only hope for the best.