There is widespread hope that the forthcoming Budget 2020 will cut personal tax through a rejig of tax rates and/or slabs. However, in addition to this, there are several other tax benefits that Budget 2020 should implement. Some of these include an increase in (i) The limit of investment under section 80C; (ii) Family pension exemption limit; (iii) Section 80TTA deduction for general citizens; and (iv) Hike in the amount spent on preventive health check-up allowed as a deduction.
Increase the investment limit under section 80C
Deduction under section 80C is a deduction from gross total income which can be claimed for investment in specified avenues or specified expenditures up till a specified limit. The existing maximum deduction available under this section is Rs 1.5 lakh, which was set in 2014. Since this deduction can be claimed for investment in a large number of avenues and several types of expenditure, the limit is easily exhausted, very soon. It is expected that the coming budget increases the limit to Rs 2.5 lakh.
Hike family pension exemption limit
If any uncommuted family pension is received, then it is exempt up to a certain extent. The current exemption limit is Rs 15,000 or a third of the amount received, whichever is lower. The said limit of Rs 15,000 should be increased to Rs 50,000 considering the actual amount of pension nowadays and to provide genuine benefit to the receiver of the pension. The family pension is taxable under the head 'income from other sources' due to which benefit of standard deduction of Rs 50,000, which is available for salaried persons, is also not available for family pension.
Increase the limit under section 80TTA and make deduction eligible for Fixed Deposit interest also
In case of normal citizens (i.e., non-senior citizens), presently deduction of Rs 10,000 is available on interest earned on savings accounts only. It is expected that the budget would hike the limit of Rs 10,000 to Rs 20,000, and also make interest from time deposits eligible for this deduction. Generally, people save less of their hard-earned money in savings accounts due to very less interest rate and prefer to keep in fixed deposits.
