While taxpayers’ money helps build the nation, it’s also true that every taxpayer looks forward to lighten his tax burden – whether it’s an individual taxpayer or a corporate. Therefore, he expectantly waits for the Union Budget every year with the hope that it’s going to get better for him.
Though the government delighted corporate taxpayers with a surprise tax cut last year, individual taxpayers are still waiting for a similar favour. Start-ups, salaried taxpayers and the middle class as always are pinning hopes on the Union Budget 2020 and expecting it to be lighter on their pocket. What should you, as a taxpayer, expect from the Union Budget 2020? Here are a few pointers.
Lower personal income tax rates
After a steep reduction in corporate taxes, it is expected that the government will lower personal income tax rates in 2020. A recent survey by KPMG, a consultancy firm, showed that most respondents are positive that the taxable limit will be increased from the existing Rs. 2.5 lakh per annum. The government may take this step to boost consumption and revive the economy.
Taxpayers are also seeking new income tax slabs and lower tax rates. As per the recommendations from the committee set up to review direct taxation, if revamped, the new personal income tax slabs and rates would look a little like this:
|Income Tax Slab||Income Tax Rate|
|0 – 2.5 lakh||0%|
|Rs. 2.5-10 lakhs||10%|
|Rs 10 – 20 lakh||20%|
|Rs 20 lakh – 2 crore||30%|
|2 crore and above||35%|
No inheritance tax
The finance minister is unlikely to introduce the inheritance tax this fiscal year, as the government should be trying its best to lower the tax burden of individual taxpayers. As this new tax may further increase the income tax liability, the government may refrain from introducing disruptive measures to worsen the gloom.
Addressing cash flow problems of start-ups
New and upcoming entrepreneurs are eagerly waiting for the Union Budget 2020 to address their cash-flow woes and help improve the ease of doing business. The new Budget may help start-ups deal with problems related to raising money from investors, GST, LTCG and tax problems related to ESOPs.
Lower GST on automobiles
The country’s automobile sector is in shambles and the government is expected to bring down the GST rate to provide some relief to the industry. Presently, the applicable GST rate on automobiles is 28% and it may come down to 18% in Budget 2020.
Increase in limit on housing value for tax incentives
The Finance Act, 2019 provided additional deductions of up to Rs. 1.5 lakhs on home loan interest payments for homes costing up to Rs. 45 lakh under the affordable housing scheme. However, in the light of increased housing and construction costs, very few taxpayers are able to take advantage of these deductions even in small towns and cities. The Union Budget 2020 may increase the cost limit or housing loan limit to bring more beneficiaries under the ambit and revive the real estate sector.
Conclusion: Needless to say, the expectations for Budget 2020 are high. It is expected that Budget 2020 may come out with a lot of positive steps for home buyers and developers alike. Real estate prices are likely to go up with the boost that the government has provided to the sector.
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