It is expected that a similar relief will be extended to the individual taxpayers in the upcoming budget which is likely to be presented on February 01, 2020.

As the economy is going through a slowdown, a rejig in tax slab and higher deduction limit would allow more disposable income in the hands of individuals. This could potentially push them to spend more, thus reinvigorating consumption.

One of the key expectations in this regard is to increase the threshold limit for minimum taxable income from Rs 2.5 lakh to Rs 5 lakh. Similarly, tax slabs and/or rates for individuals in higher tax bracket may also be rejigged.

[Read: Will the Budget 2020 Bring Cheer For Taxpayers?]

To boost saving and investment, the current exemption limit of Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961 may also be hiked. Further, taking note of the rising cost of medical treatment, exemption under Section 80D could also be increased from the current limit of Rs 25,000 (for those below the age of 60) and Rs 50,000 for senior citizens.

Here are the other key areas for aam aadmi that require focus:

Senior citizens

For senior citizens, SBI's Ecowrap research has suggested full tax rebate on the interest earned on Senior Citizen Saving Scheme, which at present is fully taxable. As per the report, it will be fair if such amount is given full tax rebate as the revenue foregone by the government could be only Rs 3,092 crores, which will have minimal impact on government fiscal deficit.

Agriculture

A large number of the country's population is dependent on agriculture. For India to achieve its dream of becoming USD 5 trillion economy by 2024-25, the agricultural sector will play a vital role. Thus, efforts have to be made to increase crop productivity and farmer's income by increased expenditure in areas like irrigation, seeds, warehousing, export promotion, farmer education, and R&D.

Housing

Home loan EMI forms a major part of outgo for many salaried individuals. Increasing deduction on home loan interest under Section 24(b) from Rs 2 lakh to Rs 2.5 lakh will provide many home buyers some relief.

Healthcare

As per WHO, India's spending on healthcare as a percentage of GDP is amongst the lowest in the world. In December 2018, PM Narendra Modi had announced that public health spending will be increased to 2.5% of the GDP by 2025, from the current 1.2%. There is an urgent need of the hour to strengthen primary healthcare ecosystem, especially in rural areas. Reduction or exemption of GST on lifesaving equipment is also necessary to ensure that health services become more affordable and accessible.

Education & skill development

Another focus area should be on improving the quality of education and skill development which in turn will improve employability. According to media reports, India ranks third in terms of education score among BRICS nation. Among South Asian countries, it has the second-lowest score in education quality, only above Afghanistan. Niti Aayog had in the past recommended increasing education expenditure to 6% of the GDP by 2022.

Even though increased government expenditure is likely to intensify pressure on fiscal deficit, the overall rise in consumption as a result can revive the economy, thereby increasing the government revenue.

Add Comments