The interim Budget 2019 has raised expectations from all sectors, especially the salaried tax payers and pensioners who are eagerly waiting for a big boost in tax savings measures, given the general elections are due later this year. In a need to balance the growth with revenue collection, providing benefits/relaxation to the individual taxpayer may be a challenge for the government.
Although there were few important changes in the last Budget such as introduction of standard deduction, amendments in capital gains section, increase in the limit of exempt interest income (for senior citizens), the entire salaried class has not benefited a lot from the amendments. Standard deduction came at the price of foregoing the exemption towards medical reimbursements and transport allowance.
Long-term capital gains exceeding Rs 1 lakh from sale of listed securities and mutual funds which were exempt earlier, are taxed at 10%.
Also, the increase in the rates of cess from 3% to 4% resulted in erosion of savings to an extent. However, the introduction of e-assessment platform has eased the mechanism of assessments by reducing the requirement of physical presence before the tax officers.
In addition, the amendment not to make any adjustments at the time of processing of the tax returns in case of any discrepancy on the income details furnished by the employer in the withholding tax certificate compared to the tax return, provided a sigh of relief to many salaried tax payers.
Although, the balance between the growth and revenue needs to be maintained, based on several requests, the government could bring in changes in the tax-free ceiling limit for individuals. The classification in the Economically Weaker Section (EWS) report may become relevant.
Given the current market situation of increased inflation, liquidity crunch, etc, the lending rates have been on an increase, affecting the housing loan rates.
The writer is tax partner & India mobility leader, EY.