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Archit Gupta

Archit is cofounder and CEO of ClearTax, an online tax filing platform used by over 1 million companies and individuals. Prior to setting up ClearTax, he worked at Data Domain Inc which was acquired by EMC2.

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What the Budget Would Look Like if I were the Finance Minister?

We are sure, this Budget would not be as disappointing and it would have something good in store for the common man.

The Budget day is just around the corner and the individual taxpayers have their hopes pinned to it. These expectations, we would say, are completely justified as the individual taxpayers had quite a bit of disappointment after last year’s budget which did not turn out to be very common man friendly. It was rather prepared and presented more with the objective of eliminating black money from the economy. We are sure, this Budget would not be as disappointing and it would have something good in store for the common man. If we were given the authority to decide on this, the following would be some key amendments/changes we would bring about.

Provide for an increase in Section 80C Deductions - It is high time this bar on claiming deduction under Section 80C got raised from the present Rs 1.5 lakhs to Rs 2 lakhs or even more to take care of the inflation prevalent in the economy.Section 80C covers in its scope, investments made in PPFs, EPFs, mutual funds, fixed deposits, etc. or premium paid towards a life insurance policy, the principal component of a housing loan repayment, expenses on children’s tuition fee and many more. This measure would go a long way in benefiting both taxpayers and the government. Taxpayers stand to gain in terms of a lower tax outgo by investing in avenues prescribed under Sec 80C while the government stands enriched because it can reap the benefits of such investments to achieve its objectives.

In fact, we would go one step ahead in raising the 80C limits, provided, investments are made in prescribed avenues like ELSS which would encourage taxpayers to invest more in such schemes that surpass the conventional avenues of investment, in terms of shorter lock-in period, better returns and tax-free gains.

Enhance returns from PPF - PPF has been one of the most traditional investment vehicles for taxpayers in India more so because it falls under the “EEE” i.e, Exempt-Exempt-Exempt category. Another reason for taxpayers to choose PPF as an option is its risk-free character. However, the returns from PPF have dropped over the last couple of years which has discouraged taxpayers from opting for PPF. We would enhance the interest rate in PPF to 8.5% which would reward taxpayers with better returns as also contribute to nation building.

Incentivize investments in houses - The tax incentives from investing in a house property appear less attractive these days. It is disheartening to note that while an average individual who has availed a home loan shells out nothing less than about Rs 3 to 3.5 lakhs by way of interest every year, he can claim a maximum deduction of only Rs 2 lakhs per year for a self-occupied house. If we were decision makers, we would consider raising this cap to at least Rs 3 lakhs per year. Another major setback to investors in house property is the restriction on set of loss from house property to Rs 2 lakhs which was announced in Budget 2017, which, we would consider withdrawing.

Increase the limit for claiming exemption of medical reimbursements – Allowability of an exemption of Rs 15,000 of medical reimbursements, upon submission of medical bills to the employer is rather less. The fact is, a limit of Rs 15,000 is barely sufficient even for a small family. Doctor consultations, prices of vaccinations, medical tests etc have skyrocketed. Therefore, it's time for a change - enhance this limit to Rs 30,000.

Leave the exemption of LTCG on sale of shares untouched – Speculations are rife that tax on long-term capital gains on sale of listed shares would be introduced in the budget. Given a chance, we would keep this untouched as this move would come down heavily on the middle class that is finally waking up to the benefits of investing in equity over long term.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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