Increase in the income tax slab limit is long time due and it is something that salaried individuals look forward to during every budget. Last years, the newly introduced tax slabs with conditions are not working for many taxpayers. At the same time, inflation continues to be on the higher side and there is a possibility of growth in income of salaried individuals to be limited in the coming financial year. This will have a major impact on their financial situation. The increase in tax slab limit can improve consumption as there will be more disposable income at salaried individuals end. Over last few years even the standard of living is constantly improving and so has been the cost of living in most of the cities.

On the tax rebate front, a higher deduction under section 80C to avail tax rebate will be effective and work for them as this will encourage more savings and long term investment. Providing additional tax benefit for new home buyers during the coming financial year in the form of higher tax rebate on interest repayment will encourage a segment of buyers to buy their home. The additional tax saving benefit can act as a good incentive. It will also increase the demand in real estate sector.

Government should consider increasing the additional deduction limit for individuals from Rs.50,000 to Rs.100,000 or Rs.150,000 when it comes to NPS. Today, section 80C limit of Rs.150,000 for many taxpayers is not enough to save tax. Increasing NPS limit for additional deduction will help people to save tax and encourage long term investing. Also, the government should look at making it EEE (Exempt Exempt Exempt) from taxation perspective. At present NPS account holder can withdraw 60% at vesting age which is tax free and remaining 40% is to be invested compulsorily in annuities.

The medical expenses are surging every year in India and need for higher health insurance cover is very crucial. Higher exemption limit under Sec 80D for health insurance premium will bring relief on tax as well as encourage people to opt for adequate health cover. 

On the government spending front, more allocation to improve infrastructure on healthcare and education sector is important. The need for more organised healthcare and education sector is evident from our experience during Covid-19 crisis. Undoubtedly, the authorities have done a commendable job to ensure the safety of people during those tough times; but this event also highlight the need for well organised healthcare and better equipped education sector.

Budget Expectations by Mr. Harshad Chetanwala,  Co-Founder-MyWealthGrowth.com