Taxpayers across the country are guessing what could be the changes hinted by Finance Minister Arun Jaitley recently. Finance minister did mention that there are bright chances of tax cuts in the future and there are wild guesses that it could be Budget 2017. Finance minister hinted that post demonetization all the transactions will come under the tax net and therefore higher tax will be collected.
There are various expectations from budget 2017:-budget 2017
Overall tax deduction limit is expected to increase to Ts 3.5 lakh – There have been expectations that post demonetization investment will increase in the financial assets and decline in the real estate. At present, household savings are more than physical assets. Investments in shares and debentures is somewhere around 1% of GDP in the previous financial year. It is expected that the Budget 2017 will give some push to the investment into financial assets as people will channel their household saving into these financial instruments. Currently, the experts are expecting that the investment limit could be surged to Rs 3.5 lakh under Section 80C, 80CCC and 80CCD(1B). The current limit is 2 lakhs.
Something for NRIs
Those who are looking to sell their property in India come under massive TDS scanner. Buyer deducts more than what is required as there is no clear guideline. Experts feel that there should be some basic guideline that the buyer and the seller of the property should be aware of in order to curb such practices against NRIs and offer them reinvestment based exemptions.
Relief for Senior Citizen
As of now when the interest income is more than Rs 10,000 per year, bank deducts 10% as TDS. In case you do not want to pay TDS, Form 15G and 15H is available. However, it is problematic for senior and super senior citizens. In order to submit the form 15G, a citizen requires to visit the bank. In case the tax has been deducted the citizen will have to wait for the refund. Many are expecting that Budget 2017 should exclude the senior citizen from the TDS or increase the limit from Rs 10,000 to Rs 50,000. Thereafter, the citizens should also be allowed to file and submit the Form15G and 15H online. In case the interest is dropping, senior citizens should be given some sort of relief. For senior citizens the exemption limit which is currently 10,000 should be increased.
There were high expectations that the income tax exemption which is Rs 2.5 lakh at present will be raise to 3 lakhs per annum. Back in Budget 2016, this proposal could not be included and therefore expectations are high in Budget 2017. Post demonetization, the expectation of giving some relief from the income tax is higher. There are expectations that tax rate of 10% for income above Rs 2.5 lakhs, 20% for those earning above Rs 5 lakhs and 30% for above 10 lakhs will come down.
There are a lot of expectations with the upcoming budget as people are looking for some relief post demonetization and cash crunch.
Short term Capital gains – The current rate of tax on the short term capital gains is fixed at 15% but it is expected to increase to 20% post Budget 2017. For long term Capital gains , where an Individual has to pay no tax if he holds the share for one year and then sells it. The Government is looking to extend the time frame from 12 months to 36 months. Investors and experts have adopted cautious tone stating that investors are already paying STT and any increase in the tax will effect the investment flow.
Corporate Tax – There could be cut in the Corporate tax rate in Budget 2017. Experts are putting forth the point that India has the highest corporate tax rate compared to any other Asian economy. Corporates are keen to bring down the tax rate down from 3%.
Affordable Housing – In the previous budget, the government made some significant announcements such as affordable homes and cheaper home loans up to the maximum loan of Rs 35 lakhs. to the Individuals and it is expected that the benefit will be continued in the Budget 2017-2018 as well.
Higher taxes on Tobacco, Alcohol, Luxury Goods and imports – Alcohol and cigarettes witness increase in the price almost in every budget and the ritual is expected to continue in Budget 2017 as well. Further, importing high end electronics and automobiles can also cost more as the Government could come up with higher tax rate over these items.