Union Budget 2019 is just around the corner and everyone including salary earners and family pensioners have a list of expectations from Union Finance Minister Niramala Sitaraman, who will be setting the agenda for another year.
Besides some relief in direct taxes, salary earners expect the government to remove the ₹2-lakh cap under the head ‘income from house property’. As of now, an employee can claim a deduction of up to ₹2 lakh on their home loan interest against their salary if the owner or his family resides in the house property.
Most of the salary earners purchase house properties with loan from financial institutions and the loan period is usually 15 to 20 years and so the interest component is heavy. But the maximum loss that can be claimed under ‘income from house property’ is only ₹2 lakh. The balance has to be carried forward to the next year. Since the interest component is heavy even in later years, it leaves little room to claim the full amount. Thus, the salary earners want the ceiling to be removed.
If the government is not prepared to remove this ceiling, a similar cap may be allowed for the second property also as exemption from self-occupied property was extended to two houses with effect from the financial year 2019-20 (passed in the interim budget).
They also want the government to increase the exemption limit under Section 80C to ₹2 lakh from ₹1.5 lakh. The current relief is seen as inadequate because the repayment of housing loan principal forms a major chunk.
Family Pensioners expect the government to exempt the income-tax chargeable on family pension which is taxed under the head ‘income from other sources’. If not, they want the government to raise the deduction amount from the existing ₹15,000, which was fixed as early as 1st April, 1998, to ₹50,000, like for pensioners. Pensioners are eligible to get deduction up to ₹50,000 out of pension received from their former employers.
Taxpayers want the government to shift the due date for filing of the income-tax return for non-businessmen to August 31 from July 31. Though the salaried employees have the option of reporting other income to their employers enabling them to deduct tax at source (TDS) on other income, the employees seldom do this or report only part of their income. Most of the employees thus have to wait for Form 16A from the deductors or Form 26AS for exhibiting their tax deduction. But only when TDS return is filed, the tax paid by the deductors is exhibited in the employees’ Form 26AS.
For example this year, the time for filing TDS return has been extended till June 30, 2019 and most of the employees would get their Form 16 and updated Form 26AS only by July 10. In order to overcome this difficulty, taxpayers feel the date for filing of income-tax return for salary earners be extended to August 31 through necessary amendment in the Finance Bill/Act instead of extending through a Board Circular in the last minute.
The salaried class also want the government to shift the first advance tax date from June 15 to September 15. The salaried class is liable to pay an advance tax for their other income as taxes on their other income would be deducted only at 10 per cent whereas their total income will be in different brackets (rates of tax). During June, most of the salary earners spend on the educational expenses of their children, which are quite high nowadays, and they are not left with enough money to pay the first installment of advance tax on or before June 1. The shift in the deadline may help taxpayers pay their first advance tax on time.
(The author is a Chennai based Chartered Accountant.)