The Union Budget 2020 will be presented on the 1st of February 2020. This will be the second budget of Finance Minister Smt. Nirmala Sithraman. Each and everyone have their eyes on the Budget, people are expecting certain tax reliefs from Union Budget 2020. Keeping in mind the current economic scenario of the Indian Economy the Union Budget 2020 poses certain challenges for the Finance Minister.
This article lists basic direct tax expectations from the Union Budget 2020:
1. Change in basic exemption limit:
Taxpayers are expecting that the government might raise the basic exemption limit. 'However, the government would want to retain the base of the tax filers and would, therefore, might not raise the basic exemption limit as lesser people will come under the tax bracket in that case,' said tax expert, CA Guri Chadha. In the last years Union Budget as well the basic exemption limit was not raised however a major relief was given to the taxpayers in the form of rebate and thus people with income up to Rs. 5 lacs were exempted from paying tax. The benefit of the rebate is expected to continue. The government might increase the income tax slab up to Rs 7,00,000 for tax bracket up to 5%.
2. Raise in limit under Section 80 C:
The limit under section 80C has remained unchanged in the past few years. Currently, an eligible taxpayer can claim a deduction of Rs. 1,50,000 under section 80C. The taxpayers have been demanding for a very long period of time to raise the limit under section 80C. Hopefully, the government might raise the limit under section 80C of the Income Tax Act, 1961 in this year's budget. The task force has suggested raising the limit under section 80 C in this year's budget. Tax experts say that the section needs a complete overhauling.
3. Change in holding period under LTCG:
Currently, LTCG up to Rs. 1 lac per person is exempt in FY. The basic exemption of Rs 1 lacs can be increased to Rs 3 lac. The holding period of an asset under long term capital gains can also be raised which is currently 3 years. Doing so will encourage investments in the country and might be a good move to revamp the Indian economy which is currently facing a slowdown. The government is also considering to do away with LTCG on selling the property to boost the real estate sector.
4. Rationalization of Dividend Distribution Tax:
Along with the long term capital gains, the government might rationalize the Dividend Distribution Tax as well in this year's Union Budget. Rationalizing Dividend distribution tax might be another way to encourage investments and boost the economy.
5. Standard deduction under section 24(b):
The standard deduction under 24(b) in house property has not been revised over the past few years. The government might raise the standard deduction under section 24(b) in this year's budget.
6. Other Exemptions:
Taxpayers are also expecting some other relaxations from the Union Budget 2020.e.g. there might be an increase in house rent allowance, children education allowance, etc.
Last year's budget provided a major tax relief to the corporates. Hopefully, this year's budget will focus on providing tax relief to individual taxpayers.
Tags Union Budget