In Modi government 2.0, what changes could be expected in Union Budget ?

Currently, those with income of upto Rs 2.5 lakh are exempted from tax net. However, this limit may be raised to 3 lakh in the upcoming Budget.

The proposed tax will put at least Rs 2,500 more money in the hands of taxpayers, thereby giving an indirect impetus to the economy.

Written by July 2, 2019 16:39

New Delhi: When Finance Minister Nirmala Sitharaman presents the Union Budget on July 5, it will be her as well as Modi government 2.0’s first budget.

There are wide speculations and expectations that Finance Minister may announce major tax relief for the common man. Analysts believe that the government might raise the tax exemption limit and may also provide tax sops to stimulate the economy.

Notably, the Modi government 1.0 had raised the tax exemption limit from 2 lakh to 2.5 lakh.

A look at what could be done in Union Budget

1) Hike in Tax exemption limit

Currently, those with income of upto Rs 2.5 lakh are exempted from tax net. However, this limit may be raised to 3 lakh in the upcoming Budget.

The proposed tax will put at least Rs 2,500 more money in the hands of taxpayers, thereby giving an indirect impetus to the economy.

2) Concessions in 80 CC list:

Currently, the tax exemption limit for savings and investments under the Section 80 CC of the Income Tax is Rs 1.5 lakh. The Finance Ministry is looking to raise this limit to Rs 2 lakh.

Common people can make maximum use of this to invest their income in schemes like NSC, NPS, EPF, PPF and Sukanya Samridhi scheme.

This will turn out to be a rewarding move for the taxpayers/salaried employees as they will be left with more money to invest in schemes/bonds to safeguard their future.

3) Clause for super-rich in Union Budget?

A separate clause may also be introduced in the Budget to widen the tax structure for super-rich class. Currently, they are categorized in the 30% tax slab. The Finance Ministry is reportedly contemplating to raise tax on the super-rich league.

Those availing/seeking home loan are also likely to benefit. Till now, home loan upto Rs 2 lakh didn’t come under the tax ambit but this amount may rise when Nirmala Sitharaman presents her first Budget in the Lok Sabha.