The Union Budget 2015-16 is to be unveiled on Feb 28, by Finance minister Arun Jaitley. There are huge expectations of reforms around the Union Budget this time. This does not mean that it should have very little for the middle class, especially the salaried ones, who are burdened with rising costs of accommodation, medical and education.
More Savings Means Higher Demand
Individuals need to pay tax if their income is over Rs 2.5 lakhs. The limit was raised from Rs 2 lakhs to Rs 2.5 lakhs last year. Pushing the limit to at least Rs 5 lakhs, would leave more in the hand of individuals, increasing savings and pushing higher demand for goods and services. This would certainly boost GDP.
Raise Limits to Rs 2 Lakhs At least
Finance Minister Arun Jaitley should also hike the tax breaks individuals get under Sec 80C from Rs 1.5 lakhs to Rs 2 lakhs. This would leave more money in the hands of individuals and it would increasing savings in financial assets. It would help people move away from gold and investment into assets like real estate.
This Needs To Be Reviewed
Individuals get a tax break up to Rs 300 per month per child up to a maximum of two children for hostel allowances. This is extremely low considering that hostel expenses are way way beyond that. It is also not in tune with times and the exemption has not been hiked for many years now.
Not Reviewed for Many Years
Individuals get tax breaks if they avail food meal vouchers and this is exempt up to Rs 50 per meal. This is again too low and Finance Minister Arun Jaitley should also review the same. This has not been reviewed for many years now.
Should Go Beyond Rs 800
Transport Allowance for commuting from residence to office is provided at Rs 800 per month. This limit needs to be increased to at least Rs 3000 considering that transport costs have gone up substantially in the last few years.
Tax Breaks for Health Insurance Premiums Paid
Insurance premium paid in respect of medical insurance is exempt up to Rs 15,000 a month (senior citizens Rs 20,000).
This limit also needs to be enhanced as insurance premium rates have also been hiked.