Union Budget 2018: Salaried Class Left Wishing For MoreBloombergQuintOpinion
A few drops to a thirsty man – that is what the Union Budget 2018 appears to be from an individual’s perspective.
As Finance Minister Arun Jaitley began with a preamble on the tax collections from the salaried class, and the whole of India watched in anticipation, his announcement of a standard deduction of Rs 40,000 quickly translated into a mere whimper as it came accompanied with withdrawal of the medical reimbursement of Rs.15,000 per annum and the monthly transport allowance of Rs 1,600. Hence, effectively, the benefit dwindled to a mere Rs 5,800 per annum.
Add to that the increased 1 percent health cess, and the new 10 percent tax on long-term capital gains in excess of Rs 1 lakh, and we realise that he has actually taken away more than he has given.
That’s not all. The erstwhile LTCG exemption u/s 54EC which was applicable for any long-term gain is now restricted to LTCG from land and building only. Hence, capital gains from other long-term assets will not be eligible for exemption upon investing the gains into specified infrastructure bonds. Furthermore, the redemption period of the eligible bonds has now been increased to five years which means that the money will be locked in for a longer term.
Another interesting provision introduced (Section 56(2)(xi)) is that any compensation/payment connected with termination or change in the terms of employment will now be taxable income.
The finance minister has proposed to increase the limit u/s 80D to Rs 50,000 from Rs 30,000 and benefit is now extended to senior citizens (as opposed to very senior citizens earlier). In respect of specified critical illness too, the deduction limit has been increased from Rs 60,000/80,000 (for senior citizens/very senior citizens) to Rs 1 lakh.
The most welcome bit is the introduction of new Section 80TTB which allows our elders to a deduction of upto Rs 50,000 of interest income from banks (including term and recurring deposits), PO savings, etc. with corresponding amendment for no deduction of TDS on such income.
This largely covers the Budget for individuals, which has left most of the salaried class wishing for more.
Ishita Sengupta is partner - personal tax at PwC India.
The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.