7 expectations of salaried employees from Budget 2019

Listed below are some of the expectations of the salaried class from the budget 2019:

It was the Finance Act 2014 that increased the basic income tax exemption limit and section 80C deduction limit to Rs 2,50,000 and Rs 1,50,000, respectively.  Although the government in the past has provided additional relief in terms of reduced tax rates and rebates, increase in basic exemption limit and section 80C deduction limit is one of the biggest expectations from budget 2019.

The government in its budget 2018 provided additional medical benefit to senior citizens keeping in mind the inflationary rise in trends of medical expenses. However, such benefit is applicable only in the case of senior citizens and not for others. There is a need to increase the limit for self and family to Rs 40,000. Besides reaping tax benefits, the move will ensure higher participation in preventive health measures.

Above allowances were not revised since the past 21 years in spite of rise in the education/hostel living cost. The seventh pay commission also recommended education and hostel allowance as Rs 2,250 and Rs 6,750 per month, respectively. It is imperative now to revise the limit and bring it at par with reality. Alternatively, the government can provide standard deductions against these expenditures, by enhancing the base.

Claiming of FTC at withholding stage is the most discussed topic.  Ambiguity prevails under the contemporary provisions and practical difficulties in disclosing FTC by the employer in form 16 and electronic withholding tax returns continue as of date. However, considering the recent judicial precedents, the salaried class could expect this budget to suggest specific provisions and documentation for claiming the foreign tax credit at monthly withholding stage in India. This will reduce the hardship such as cash flow issues, locking of refund, etc. of the salaried taxpayers.

For the purpose of House Rent Allowance exemption, the metro cities currently include Delhi, Mumbai, Chennai and Kolkata.

It may be noted that cities like Hyderabad, Bangalore, Gurgaon and Pune have witnessed a significant rise in rent payment in line with the metro cities. Therefore, it is expected that the benefit of 50 percent of rent could be extended to these cities as well.

As per Rule 3 of Income tax Rules, 1962, perquisite value of motor car (cubic capacity of engine exceeds 1.6 liters and chauffeur is provided) owned by an employee used partly for the official and partly for personal purpose is derived by reducing from the actual expenditure Rs 39,600 only. On the other hand, where the car is owned/provided by the employer then the perquisite value is only Rs 39,600. Hence, salaried class is hopeful of an increase in the amount of deduction where they use their own motor car.

Currently, there are no provisions under the tax law to provide special benefits to the working woman. In order to participate in the professional world, the woman community incurs substantial expenditure on day care, crèche facilities, hiring domestic help, etc. The government should offer certain tax sops to working woman such as deduction for day care, crèche facility, etc. in order to encourage higher participation by women.

While the wish list of a salaried class employee may be never-ending, implementation of some tax benefits discussed above (if not all) would certainly cheer them. As salaried individuals continue to contribute significantly to the tax kitty of the government, tax measures in their favor would stimulate their sentiments.