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The Union Budget 2018 is ready to be heard by the entire nation very soon. Finance Minister Mr. Arun Jaitley will present this budget before the parliament. The salaried individuals have high expectations from this Union budget which is the last one in Mr. Modi’s government. There were some financial reforms made last year like demonetization and GST. This will be a budget post-GST.
Salaried Individuals’ Expectations
Salaried individuals have expectations from income tax slab in Budget 2018. They are anticipating an exemption of at least 50,000. The salaried individuals have high expectations from this 2018-2019 Union budget, which will be presented on this February 1.The basic exemption limit may be increased from 2.5 lakhs to 3 lakhs. The media buzz says that Mr. Jaitley is likely to give this announcement to bring some relief to common man.
This exemption limit increase was expected in 2017 budget itself as the common man suffered because of demonetization. However, Mr. Jaitley preferred to make some changes in the tax slabs. He reduced the tax slab from 10% to 5% for individual assesse between income 2.5 lakhs to 5 lakhs. This reduced the tax liability of all the individuals to zero or 50% of their earlier liability.If we recollect the Union budget of 2017, Mr. Jaitley made a statement that the taxation burden was more felt by the honest salaried taxpayers, who were showing their income correctly. Hence post de-monetization; there was a reasonable expectation from this class, for reduction of tax liability.
Modi Effect on Income Tax
Keeping all these circumstances in mind, it appears that Mr. Modi’s government is in favor of a reduction in the tax. Last Year the tax slab was reduced from 10% to 5% to taxpayers earning income between 2.5 lakhs to 5 lakhs and increased the tax slab from 10% to 20% to those earning income above 5 lakhs. The increase is straight away 10%. Keeping the inflation rate in mind, the government may decide to reduce the tax slab, for individuals to have more income on hand, which will increase the consumption of goods and will increase economic growth.
Keeping the Fingers Crossed
There are also guesses that the tax slab of 20% may be raised from 5 lakhs to 7 lakhs, and for 30% tax slab the income may be raised from 10 lakhs to 12 lakhs. It is also perceived that lower the tax slab, lower the tax evasion. The government is encouraging the honest tax paying individuals by reducing the tax rates or by increasing the tax slabs. The medical reimbursement component also should be increased above 15000.The highest income group should be raised above 12 lakhs. The exemption limit needs to be increased according to section 80C between 2 lakhs to 3 lakhs. All the individual salary taxpayers are eagerly waiting to hear what is in store for them from this union budget 2018-19 from Mr. Jaitley. Let’s wait for the suspense to unfold.