Millennials want lower GST on health insurance, more savings on home loans

Tax benefit on WFH expenses, regulatory clarity on cryptos also figure high on their wish list from this Budget

A recent survey titled ‘Millennial Mood Index 2021’ conducted by CASHe, an artificial intelligence-driven financial wellness portal, found that over 84 per cent of the millennial respondents have stepped up wealth management to prepare for future contingencies. Millennials, who appear to have become more interested in their personal finances in the wake of the coronavirus (Covid-19) pandemic, have high expectations from Union Budget 2022.

Lower GST on health insurance  

Covid-19 has driven home the significance of having adequate health insurance cover for the family. Durga R, a Mumbai-based self-employed person says, “I bought several health insurance policies recently – one family floater and four separate plans for senior citizens. I fail to understand why Goods and Services Tax (GST) should be levied on health insurance.” He wants relief on this front.  

Experts agree. Naval Goel, founder and chief executive officer (CEO), PolicyX.com says, “Health insurance has become a basic need amid the pandemic. The GST rate should be reduced from 18 per cent to 5 per cent.  An 18 per cent rate is exorbitant for a product that saves lives.” He adds that the tax deduction limit on health insurance should also be hiked from Rs 25,000 to Rs 50,000.  

Homeowners’ expectations

Most taxpayers, including millennials, want the tax deduction on home loans to be hiked. Currently, principal repayment qualifies for deduction under Section 80C, which has a limit of Rs 1.5 lakh per year. But so many instruments are crammed into this section – Employees Provident Fund, Public Provident Fund, life insurance premiums, etc. – that barely any room is left for principal repayment.

Ashok Shah, partner, NA Shah Associates says, “The deduction limit under Section 80C was increased from Rs 1 lakh to Rs 1.5 lakh from FY14-15.” Considering inflation, increase in real estate prices, and today’s higher EMIs, homebuyers feel the Rs 1.5 lakh limit should be revisited. Shah says, “The government can increase the Section 80C limit by at least Rs 1 lakh, with the extra limit earmarked specifically for principal repayment.”

Alternatively, millennials want the existing deductions under 80C, 24B, and 80EEA to be clubbed under one common section, with a deduction of up to Rs 5 lakh, with no sub-limits for principal and interest.

Adhil Shetty, CEO, BankBazaar, is of the view that the definition of affordable housing should be revised. “It should be raised beyond the price cap of Rs 45 lakh in metros to bring more houses within the ambit of affordable housing, allowing them benefits like lower GST rate of one percent without input tax credit.”

Work-from-home benefit

Millennials expect a Work-From-Home allowance in the upcoming Budget. Smitha WP, a private-sector employee says, “We need tax relief on expenses incurred on carrying out office work from home on things like internet charges, rent, electricity, furniture purchase, etc.”

The Institute of Chartered Accountants of India (ICAI), in its pre-budget memorandum, has also proposed that expenses incurred on furniture and other set-up costs be exempted.

Standard deduction is given to salaried employees under Section 16 of the Income-Tax Act. Mukul Chopra, senior partner, Victoriam Legalis-Advocates and Solicitors says, “The standard deduction could be increased from Rs 50,000 to Rs 1 lakh.”

Regulatory ambiguity around cryptos  

Millennials have flocked to cryptocurrencies and Non-Fungible Tokens (NFTs) in large numbers. Jay Chowdhary, a Mumbai-based writer-director, says, “We expect clarity in terms of how crypto transactions will be regulated and taxed, and whether they will be treated as goods, securities or currencies.”

For young investors who have invested in cryptos, the lack of regulatory clarity poses a big risk.

Sameer Jain, managing partner, PSL Advocates & Solicitors, says, “After the Supreme Court judgment declaring cryptos as illegal but subject to regulation, there has been an underlying understanding among investors that their money is safe and the market will be regulated at best.” He adds that even if the government now declares crypto trading as illegal, it must allow a cooling period so that investors are able to exit their investments without a big loss.

More items on the millennial wish list

● Hike 30 per cent tax slab, which has been stagnant at ~10 lakh since 2013

● Offer relief on taxation of interest income from fixed and recurring deposits

● Triple the Section 80TTA deduction on interest income from savings account to ~30,000

● Offer separate deduction outside Section 80C on term insurance premiums, and remove GST on it