Budget & Tax: On Path To Prudence, Jaitely Skips Tax Tinkering; Leaves Salaried Individuals Disappointed
If the middle class expected Finance Minister Arun Jaitley to shower it with goodies in his government's last full Budget before the general election in 2019, all they could have exclaimed after his Speech would have been utterances of disappointment. The target audience of the FM's about two-hour long speech, were the poor, and not the salaried middle class—while announcing several measures to improve the condition of rural Indians, Jaitley refused to provide any relief to India's emerging middle class.
The message was put across at the outset.
“This year's Budget will particularly focus on strengthening agriculture and rural economy, provision of good health care to economically less privileged, taking care of senior citizens, infrastructure creation and working with the states to provide more resources for improving the quality of education in the country,” the FM said early in his Speech.
Later, moving to his finance proposals, Jaitley said: “The government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years. Therefore, I do not propose to make any further change in the structure of the income tax rates for individuals.”
Some relief was offered to the salaried class in the form of a standard deduction of Rs 40,000 per year in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. This, the FM said, would help middle-class employees in terms of reduction in their tax liability. Pensioners, too, would benefit from the move.
The wish-list that was
Before Budget, the Deloitte Personal Tax Survey 2018 had earlier said that a reasonable reduction in the existing personal tax rates would bring cheer to the taxpayers, especially in the wake of rising inflation and reducing purchasing power.
Fifty five per cent of the respondents that took part in the survey wanted the basic exemption limit on income tax to be raised from Rs 2.5 lakh to Rs 5 lakh.
Fifty one per cent of the respondents said that in case of self-occupied property, deduction of interest on housing loan should be extended to at least Rs 3.5 lakh from the existing Rs 2 lakh.
Fifty eight per cent of the respondents said the concept of taxability of deemed rent on vacant properties should be discontinued. If one owns more than one house property, the notional rent of a vacant property is also tax currently.