In one of their recent monthly coffee meets, three best friends, Soniya (beautician), Nidhi (homemaker) and Manish (salaried person), found themselves deviating from the usual topics of discussion of career, job, family or vacation to a more serious discussion about their personal finance looking at the scheduled Union Budget to be announced on February 1. Let’s find the gist of their conversation and the expectations of a common Indian from the upcoming Union Budget:
Soniya (Beautician): Friends, I think the ‘Make in India’ campaign and the very recent Davos trip and the serious efforts towards its execution will surely make India emerge a global business centre. It will create more jobs as well and ample opportunities, but I also believe that apart from running ‘Make in India’ campaign, the government should also take care for the people who ‘Make for India’. Our local small & medium enterprises (SMEs), right from manufacturing to services industry, have to be given easy access to finance and a much easier process of setting up their businesses. To foster entrepreneurship, many things needs to be implemented and tax system needs to be relaxed, such as the recent challenges of paying angel tax, for which every start-up which has raised angel money, has received a notice. They should create a mechanism and laws should surely be made to catch the black money hoarders or tax evaders, but not the genuine start-ups who has put everything on stake, their jobs, savings, houses, etc.
As soaring oil prices are again the main driving force behind inflation, the government should reduce taxes on it, and make sure that the benefit of taxes collected in the form of GST, customs, excise and personal income tax, etc, are passed on to common people in terms of basic things we expect, good air to breathe, clean water and better health and education facility.
Nidhi (homemaker): Well said Soniya, being a homemaker for me, every single penny saved is a penny earned for me. I expect the Budget to reduce my worry of increasing inflation, which raises the prices of basic necessities like food, gas and other household expenses, my children’s education fees. All these costs have been on a rise without any respite. Being a homemaker, I aim to save and convert the same to some fruitful investments. So, I wish that our finance minister takes suitable measures to increase my savings by reducing our living expenses.
Very recently India’s wonder girl Manushi Chhillar who have recently won the beauty pageant, have beautifully said that it is the mother who deserve the highest amount of salary and keeping that in mind, I also have a strong suggestion, every husband should pay a salary to his wife and the government should allow it as a deductible expense in the form of a tax benefit.
Manish (salaried person): Well said Soniya and Nidhi, you have hit the bullseye, in fact I also have a long list of expectations which most of the salaried class taxpayers have from our FM:-
Increase the basic exemption limit: The basic exemption limit needs to be increased from Rs 2.50 lakh to at least Rs 5 lakh looking at the many taxes I pay in the form of GST and direct income tax, everything I buy or earn, I pay tax. Apart from that the inflation in every sector, exemption limit should to be raised by good margin.
Section 80C limit: At present, Section 80C deduction limit is kept at Rs 1.50 lakh only for past many years and again the reasons as mentioned in the first point applies here also. This limit should be revised and to be raised at least to Rs 3 lakh or 4 lakh.
Interest on bank savings account: The current limit of Rs 10,000 exemption from savings account interest should be hiked too.
Medical expenses: Health is one of the biggest worry for any Indian and the government should increase the existing exemption limit of Rs 15,000 towards medical reimbursement to Rs 1 lakh minimum.
Home loan interest and principal benefits: The limits for both the tax deduction options from interest and principal should be increased, the interest on our home loans are more than Rs 2 lakh and the same should be revised to a higher limit and principal benefit should be kept outside the Section 80C limit and provided separately.
Re-introducing standard deduction: Salaried taxpayers don’t enjoy any deduction of expenses from income as compared with their self-employed and businessmen friends. I wish they bring the standard deduction back in the rule book for every salaried taxpayer.
By this time, the waiter came with the bill and they shook hands and promised to meet next week hoping that their voices are heard.
So, let the common people have their share of fun, too.
POINTS TO PONDER
- A husband should pay a salary to his wife and the government should allow it as a deductible expense in the form of a tax benefit
- The Budget should reduce the worry of increasing inflation, which raises the prices of basic necessities like food, gas and other household expenses
- The basic exemption limit needs to be increased from Rs 2.50 lakh to at least Rs 5 lakh
- The government should increase the existing exemption limit of Rs 15,000 towards medical reimbursement to Rs 1 lakh minimum
The writer is a chartered account and chief gardener at Money Plant Consultancy