Revision in the income tax exemption limit to at least Rs four lakh is the most important and pressing expectation of a common-man who also seeks from the Finance Minister Mr Arun Jaitley extra incentives for savings and more tax allowance for expenditure on, an ASSOCHAM Aam Aadmi survey for the ensuing budget, has noted.
Over 87% of respondents in the survey said, increasing the basiclimit from the present Rs. 2.5 Lakh to Rs. 4 Lakh should be the minimum that the Finance Minister should announce in the 2016-17 budget. The higher exemption limit was necessitated by increasing cost of living, particularly with regard to health, education and transport.
The amount of medical expenses reimbursed by the employer on treatment of employees or family members is exempt from tax to the extent of Rs. 15, 000 per annum. This limit was set in 1998 and it will be a welcome step for the government to consider increasing the exemption limit to a more realistic Rs. 50,000 per annum, said nearly 88% of the respondent.
Similarly, deduction of Rs. 15,000 under section 80D for payment of medical insurance premium was set in the year 2008. In order to encourage and bring more people under the health insurance umbrella, the deduction could be increased to Rs. Rs. 50,000, add majority of respondents.
The survey was conducted in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh, Dehradun etc. About 500 employees from the different sectors were covered by the survey from each city on an average.
Majority of respondents said leave encashment exemption limit for taxshould be raised to Rs 10 lakhs. The current limit of Rs three lakh was notified by the CBDT way back in 1998 and needs to be raised substantially.
Also the children education allowance exemption limit should go from the present Rs 100 to Rs 1,000 per month. Likewise, the hostel expenditure allowance which is presently exempt up to Rs 300 pm per child for maximum of two children be increased to Rs 3,000 pm.
The limit for children education allowance is too low as compared to the prevailing school fee and was fixed in FY 1988-99. Also, the limit hostel expenditure allowance as also fixed in 1988-89,” it said.
A similar situation exists with regard to medical expenses reimbursed by the employer. It is exempted to the extent of Rs 15,000 per annum. This limit was fixed 17 years ago and needs to be revised significantly, at least to Rs 50,000 per annum.
About 76% of the respondents said that the standard deduction for salaries employees should be revived. Standard deduction is not a personal allowance but was earlier given as a lumpsum for meeting employment-related expenses such as on conveyance, books, and so on. Salaried employees should not be deprived of standard deduction from their salaries when professionals/businessmen are eligible for deduction of expenses incurred for earning their income.
Exemption limit of conveyance allowance which is currently Rs. 800 per month should be increased as there has been a substantial increase in petrol and. Similarly, increased necessitates the need to revise the exemption limits for various allowances like hostel expenditure allowances and children education allowance appropriately to them with the market rates.
Over 72% of the respondents said that risingfor home loans and skyrocketing property prices strengthen public expectation for revision of the exemption limits for interest on self occupied property. Its’ time for the limit of Rs. 1.5 Lakh set in the year 2001 to be increased to Rs. 3 Lakh.
The deduction of Rs. 1.5 Lakh under section 80C is currently applicable to a wide range of specified investments/ expenses like PPF, post office deposit, repayment of housing loan,and children’s school expense. The government may consider increasing the exemption limit to Rs. 3 Lakh to promote investments and encourage saving among taxpayers, highlighted the respondents.
Around 55 per cent of the survey respondents fall under the age bracket of 25-29 years, followed by 30-39 years (26 per cent), 40-49 years (16 per cent), 50-59 years (2 per cent) and 60-65 years.
The survey was able to target employees from 18sectors, with maximum share contributed by employees from IT/ITes sector (17 per cent). After IT/ITeS sector, contribution of the survey respondents from financial services is 11 per cent. Employees working in engineering and telecom sector contributed 9 per cent and 8 per cent respectively in the .
Nearly 6 per cent of the employees belonged from market research/KPO and media background each. Management, FMCG and Infrastructure sector employees share is 5 per cent each, in the total survey. Respondents from power and real estate sector contributed 4 per cent each. Employees from education and food& beverages sector provided a share of 3 per cent each. Advertising, manufacturing and textiles employees offered a share of 2 per cent each in the survey results.
Source : http://www.assocham.org