Budget 2019: Here are some additional tax-saving measures that are expected to bring relief to salaried taxpayers

While the interim Budget 2019 is set to be presented by the Finance Minister on February 1, as in the case of every year, there is expectation from all sectors. Given that this is the last Budget before general elections, salaried tax payers are in hope for some additional tax savings measures.

Last year, the salaried tax payers did not have much to cheer with the government introducing the standard deduction while taking away the benefits for transport allowance and medical reimbursement. Long term capital gains exceeding Rs 1 lakh from sale of listed securities and mutual funds which were earlier exempt, became taxable at 10 percent.  Also, the increase in the rates of education cess from 3 percent to 4 percent reduced the net savings of individuals. Introduction of e-assessment platform was good move by the government, which eased the entire assessment mechanism.

People are expecting the government to come up with some tax proposals in favour of the salaried class: 

The tax-free ceiling limit to be rationalised for individual taxpayers while keeping in mind the objective of striking a balance between growth and revenue. The expectation is that the government may also re-introduce the exemption for medical reimbursement and transport allowance which would thereby incentivise the salaried class by increasing their disposable income. The pre-Budget recommendation by the Confederation of Indian Industry (CII) and the classification in the Economically Weaker Section (EWS) report may become relevant.

In an endeavour to meet the commitment and vision of ‘Housing for all’ and considering the increasing inflation rates, the government may consider increasing the ceiling limit for claiming interest on housing loan from Rs 2 lakhs to Rs 3 lakhs.

With an objective to increase the purchasing power and improve the standard of living, the current deduction ceiling of Rs 1.5 lakhs under Section 80C of the Income Tax Act, may be raised to Rs 2.5 lakh.

As a step ahead towards the vision of “digital India”, the government could explore to introduce the jurisdiction free e-assessments to enhance the transparency and simplify the assessment procedures, by providing appropriate guideline / framework.

Investors are eyeing on National Pension Scheme (NPS) as an attractive investment in the coming years, especially after the Union Cabinet approved the proposal of exempting the lump sum withdrawal of 60 percent on exit. With this, the 60 percent lump sum withdrawal and the commuted 40 percent will now be exempt from income tax. There could be a special mention in the interim Budget on these lines.

While one could have expectations on various tax relief measures, one must wait and watch how the government is planning to meet all these expectations or to say the least, some of the expectations, if not all.