Once again, it’s budget time. Last year’s budget wasn’t a great one to rejoice for common man, especially with taxation. However, this time expectations are high with new government promising a budget focused to benefit common man. Though there are a lot of expectations on budget 2014, let’s have a look at the top 5:
1) Change in tax slabs
It is the talk of the town. The tax slabs weren’t tinkered in the last year’s budget. Now, everyone believes the finance minister will make substantial changes in the tax slabs. Increasing the basic exemption limit seems to be the priority. The current exemption limit is Rs. 2 lakh. This could be increased to anywhere between Rs. 3 – 5 lakh. The slabs could also see a change. The 10% slab could be extended to Rs. 10 lakh from the existing Rs. 5 lakh. Similar changes are expected in the 20% and 30% slabs as well. If this proves to be a reality, millions of tax payers will rejoice.
2) Increase in Section 80C limit
This has been a long standing demand from all the tax payers. The section 80C deduction limit has got stranded at Rs. 1 lakh for a long time. Experts believe that household investments have not been up to the mark. Moreover, inflation has hit us badly. Increase in the tax deduction limit u/s 80C will ensure that there will be higher investments and higher tax saving too. Most of the people believe the limit on this section will be doubled to Rs. 2 lakh. If this happens, it will be a great relief to all of us.
3) Extend housing loan deduction limit for first time home buyers
Budget 2013 gave a booster to all the first time home buyers. It is in the form of additional deduction of Rs. 1 lakh for the home loan taken for this purpose. This is apart from the existing loan deductions available under sections 24 and 80C for interest and principal parts respectively. There is a huge demand that this new section called 80EE should be extended to the next financial year as well.
(Also see: Home loan transfer)
4) Increase medical reimbursement limit
Currently, every employer offers a facility for re-imbursement worth Rs. 15,000 on the medical expenses incurred by the employee. This limit was fixed long back. However, things have changed and medical expenses have multiplied like a strong virus. This limit needs to be increased to at least Rs. 50,000 – Rs. 1 lakh.
(Also see: Tax benefits under section 80D)
5) Increase home loan deduction limit u/s 24
Home loans provide tax deduction benefits in two forms – interest and principal. Tax deduction on interest is a part of section 24 of income tax act. The current limit under this section is Rs. 1.5 lakh. Real estate prices have sky rocketed in the past decade or so. Because of this, people are applying for greater loan amounts, which results in higher interest payments. Hence, there is a demand from various sections to increase this deduction limit to at least Rs. 2.5-3 lakh p.a.
Let’s hope all our expectations are met in the 2014 budget which is expected soon.
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