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25 suggestions from experts on how Budget 2017 can improve, simplify your personal finances
Posted by : Anonymous on Dec 21,2016 09:01 AM
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. We have shortlisted 25 suggestions for Finance Minister Arun Jaitley and his team. These ideas range from tax exemption for annuity income and higher deduction for home loans to removal of service tax on health insurance and more incentives for cashless payments. All of them impact your savings, investments and incomes in some way. We are sure that at least some of these suggestions will find their way into the draft bill.
However, managing the expectations of people will not be an easy task for Jaitley. After demonetisation, the annual clamour for tax cuts has become louder. The long-term benefits of the move are yet to be seen, so many taxpayers want a short-term balm. Almost everybody expects a big tax relief in the coming Budget. “Honest taxpayers who have diligently paid taxes all these years should be rewarded with a big tax cut. Either the tax rates should be lowered or the basic exemption limit should be raised,” says the head of a mutual fund house.
The math of matching these expectations is scary. Even a minor concession has a huge impact on the exchequer. Increasing the basic exemption by Rs 10,000 would translate into a loss of roughly Rs 3,000 crore for the government. If the basic exemption limit is raised to Rs 3 lakh, it would mean Rs 15,000 crore foregone in tax. If it is raised to Rs 4 lakh, the government coffers will lose an estimated Rs 45,000 crore. This is 53% more than the Rs 29,363 crore collected as tax under the Income Declaration Scheme this year.
Even as taxpayers expect a slew of concessions, analysts are worried that the government may turn populist in the budget proposals. Elections to five state Assemblies (Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur) are due in 2017. Budget is framed with an eye on these polls, the outcome may be very sweet in the short-term but could harm the economy in the long-term.
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