Budget 2019: Tax Relief Expected, But What Do Experts Think?

Personal Financial Expert Gaurav Mashruwala

(Photo: The Quint)

Modi government 2.0 will table its first Union Budget on 5 July. Will the government bring something special for the common man, especially with respect to tax benefits? Personal finance expert Gaurav Mashruwala weighs in.

Will tax slabs change?

Former Finance Minister Piyush Goyal had made certain changes in the interim budget. These changes have been implemented from 1 April. Now, in middle of the financial year, having a tax rate in the first few months of a financial year and a different tax rate for rest of the year will be slightly problematic for the Income Tax Department, SSC as well as the government. I don’t think there will be a major change in the tax slab. But since it’s the first full-fledged budget it’s likely that there will be some changes.

Will real-estate buyers enjoy extra tax benefits on home loans?

Tax rebate of upto Rs 2 lakh on interest of home loan under Section 24 (Under IT Act) has not been substantially altered over the years. Today, if we pay 8-9% interest on home loans, then barely on a loan of Rs 20-25 lakh, we end up exhausting the Rs 2 lakh exemption limit. Now, for a middle-class man who lives in a big city, he won’t find a property within Rs 20-25 lakh.

Ideally, common man should get a full tax rebate on the first property that he buys. Any interest that the buyer has to pay for this property, should be tax exempt. But, if that cannot be done, then at the bare minimum, the limit of Rs 2 lakh should be increased.

What should we expect from the budget?

Limits for healthcare schemes like mediclaim have been increased. But the cost of healthcare has also increased substantially. It will be better if we get some relief on this front. Making changes in capital gains tax in the middle of the year will be slightly difficult. I believe it was a breach of trust for investors.

Because when STT (Securities Transaction Tax) was launched, it was said that it is an alternative to capital gains tax. Now, enforcing both the taxes simultaneously is a breach of trust because first the government replaced one tax with the other and then it brought back the previous tax and levied them simultaneously.

Other than that, in the sphere of education, according to Section 80C of IT Act, we get tax exemption on school fee of our children. There is a need to change the limit because it has not been changed for years.

Which is the best portfolio for investment?

This depends on your financial goals. If you have to achieve your goal in next 2-3 years then investing in debt fund or fixed deposit are your choices. For long-term investment goals, you must turn to equity market or equity mutual funds. Meanwhile, you can go for a combined portfolio of debt and equity funds.