THE bugle has sounded, the road is laid; it's time once more to gear up for another Budget raid!

The Finance Minister (FM), Pranab Mukherjee says the focus of the forthcoming Budget 2009 to be presented by him on July 6, 2009, would be 'aam aadmi'. Evidently, the key challenge before his team would be to help the average salaried taxpayer survive the recessionary onslaught.

Given this backdrop, what are the expectations of the ‘aam aadmi’ from this Budget? How can the FM provide fillip to increase his take-home earnings? Here are a few expectations and earnest hopes.

On tax rates
To start with, there seems to be justification for a further increase in the current threshold limit of exemption for an individual assessee (being a salaried male) by at least Rs 100,000 (from the current Rs 150,000). This is bound to have a positive impact on savings and consumption. Experience reveals that such measures also help in casting the net wider and improve compliance by the bigger ‘fish’.

On allowances for the salaried
Salaried taxpayers are currently eligible for exemption in respect of specified allowances. However, the maximum limit of exemption in case of most of the allowances are dismal, have become outdated and hence, are just not in tune with the increased cost of living of today’s times. To illustrate, transport allowance to commute between residence and office is exempt only to the extent of Rs 800 per month; hostel expenditure allowance per child (up to 2 children) is exempt to the extent of Rs 300 per month. Clearly, there is an urgent need to revisit these exemption limits.

Presently, leave travel allowance (LTA) is exempt only for travel to any place within India for self and family. But this is available for just 2 journeys performed in a block of 4 calendar years. Given the cheaper travel options available today, travel habits of average Indian families have been revolutionized. Extending the exemption to foreign travel, expanding the exemption to include lodging expenses and making the exemption available annually, would be just a few of the expectations of the ‘aam aadmi’. This would greatly boost our domestic and outbound tourism too.

Today, medical reimbursements borne by the employer on employee’s behalf, up to Rs. 15,000 p.a. are tax free in the employee’s hands. For the employee to avail expensive and quality healthcare services, this limit needs to be increased to at least Rs 50,000.

Get complete coverage on Budget

Next page: Should FBT stay? 

1 | 2 |  

e-mail: Sandip Mukherjee, PwC

Suggest a story idea! Write to us!