Experts’ Suggestions On How Budget 2017 Can Cut Your Direct Tax Burden

(As Published in ET Wealth and Times of India on November 19, 2016)

As North Block has begun work on the Finance Bill 2017, ET Wealth reached out to experts from the financial services industry to know what they want to see in the coming Budget. Here are suggestions from some experts for Finance Minister Arun Jaitley and his team on how the coming budget can help reduce the direct tax burden on the common man and also make tax compliance easier.

 

Abhishake Mathur, Head, Investment Advisory, ICICI Securities Increase overall tax deduction limit to Rs 3.5 lakh

Demonetisation could drive more investments from real assets to financial assets. Currently, household savings are heavy on physical assets, with investments in shares and debentures accounting for less than 1% of GDP in the last financial year. The Budget should help channelise savings and investments into financial assets, specifically the capital markets. One expectation is an increase in the investment limits to Rs 3.5 lakh under Section 80C, 80CCC and 80CCD(1B), which is currently at Rs 2 lakh. The tax deduction limit should be made fungible and applicable to all products held in a tax shield account, to allow flexible asset allocation.

 

Vaibhav Sankla, Director, H&R Block India

NRIs trying to sell property located in India are subjected to harsh TDS provisions. The buyer often ends up deducting more than necessary, due to lack of clarity. The Budget should prescribe basic rules for the buyer to consider the seller’s acquisition date and cost, and provide reinvestment-based exemption.

 

Sudhir Kaushik, CFO and Co-founder, Taxspanner.com
Exempt senior citizens from TDS or raise the threshold

If interest income exceeds Rs 10,000 a year, banks deduct 10% tax at source. To avoid TDS, one can submit a Form 15G and 15H, but this poses difficulties for senior and super senior citizens. First, submitting the Form 15G requires a visit to the bank, and if tax has already been deducted, they have to await the refund. The Budget should either exempt senior citizens from TDS, or raise the threshold from Rs 10,000 to at least Rs 50,000 for them. Online submission of Form 15G and 15H should also be allowed, so that senior citizens don’t have to visit the bank branch. Further, in a scenario of declining interest, it is important to provide relief to senior citizens as they cannot afford to choose risky options to maximise their return. Also, under Section 80TTA, all taxpayers enjoy tax exemption for up to Rs 10,000 interest earned on the balance in the saving bank account. This exemption limit should be enhanced to Rs 1 lakh for super senior citizens (above 80) since they don’t want to lock up money in investments at this stage of life.