The Union Budget of India also referred to as the Annual financial statement in Article 112 of the Constitution of India, 1950 is the annual budget of the Republic of India. It is presented by the Government every year on the first day of February so as to materialize it before the commencement of the new financial year in April. The Budget for Financial Year 2018-19 will be presented by Shri. Arun Jaitley(The Finance Minister of India) in the Parliament. The budget, which is presented by means of the Financial bill and Appropriation bill, has to be passed by both the houses of Parliament before it can come into effect from April 1.
With the onset of the budget for Financial Year 2018-19 being presented, the question whether will Income Tax be reduced is on the minds of every taxpayer. The last Budget by Finance Minister Arun Jaitley left the tax slabs unchanged while giving marginal relief to the small taxpayer, in the form of a reduction in the rate from 10 percent to 5 percent for individuals having annual income between INR 2.5Lakh- 5Lakh.
The expectations on the Income Tax front from Budget 2018 involve-
- The comeback of Standard Deductions: It is expected that outdated deductions will now be replaced with standard deductions so as to reduce the tax burden of employees. This would allow a flat deduction from the salary of individuals towards expenses an employee would incur in relation to the employment.
- Tax slab rejig: It is expected that the minimum exemption limit may be increased from INR 2.5Lakh to 3Lakh per annum so as to give more purchasing power in the hands of the common people and small entrepreneurs.
- Medical reimbursement: According to recommendations, the limit for medical reimbursement should be raised from INR 15,000 (Set in 1999) to 50,000.
- Section 80C of the Income Tax Act is put to use: Section 80 C of the Income tax Act provides for increase of savings of individuals. Tax Slab is raised and savings under various instruments are encouraged.
- Dividend Distribution Tax: It is expected that the government will do away with Dividend Distribution Tax in Budget 2018. Such tax is subjected on dividends paid by a domestic company to its shareholders.
- House Rent Allowance: It is expected that Higher Deductions be allowed to those employees living in the following metropolitan cities- Mumbai, Delhi, Kolkata and Chennai. Such deductions should not just be for these cities and the Government should consider adding carious other cities along with the one mentioned above.
- Reduction of period of holding for property: It is expected the minimum 3 year criteria be under Section 54 and 54F of Income Tax Act reduced to 2 years for retaining the capital gain exemption for long term gains.
- Employees switching jobs to not be required to pay a sum to employer for not serving the entire period of notice.
- Leave Travel allowance or LTC should be eased to allow exemption in respect of one journey per year rather than the present rule of two journeys in the block of 4 years.
- Higher exemption limit on allowances received for children education and hostel expenditure meaning the current tax laws regarding non taxation of allowance of INR 100 per month for education of 2 children and hostel expenditure allowance set at 300 per month be raised