Budget 2020: Top 5 income tax relief that common man expects from Nirmala Sitharaman

Budget 2020 Expectations: Finance Minister Nirmala Sitharaman is a few hours away from tabling the second Union budget (#BudgetOnZee) in the Parliament. As usual, the common man or the public, in general, is expecting some income tax relief from her because there are speculations that the Narendra Modi government is in the mood to enhance liquidity in the market. As income tax relief to the common man would increase their purchasing power capacity leading to a rise in liquidity in the Indian economy, common is expecting some major announcement from the Modi 2.0 Government today.

The major income tax relief that a common man expects from Finance Minister Nirmala Sitharaman to deliver on changes in income tax slab, income tax benefit in National Pension System (NPS) as the PFRDA has already recommended the Central Government to double the tax exemption limit. Apart from these two, they are also looking forward to some rewards for equity investment and homey loan repayments.

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Here are the top 5 income tax relief that common man is expecting from Nirmala Sitharaman today:

Change in Income Tax Slab

CS Sudheer, CEO at IndianMoney.Com said, "The middle-class taxpayers may have something to cheer in this Budget. Income up to Rs 5 Lakhs would not be taxed.  If you have an annual income between Rs 5 Lakh to Rs 10 Lakh, you could be taxed at 10 per cent instead of 20 per cent. If you earn Rs 10 Lakhs to Rs 20 Lakhs, you could be taxed at 20% instead of the current 30 per cent."

Income Tax Benefit under NPS Scheme

You currently enjoy a tax deduction of Rs 50,000 a year under Section 80CCD(1B) of the income tax act for contribution to NPS. You could see a doubling of the tax benefit under the NPS from Rs 50,000 to Rs 1 Lakh a year.

Removal of LTCG Tax

The Government wants to promote equity as an inflation-beating investment for the long term. The introduction of long term capital gains tax of 10 per cent on equities in Union Budget 2018-19 was a shocker as LTCG was introduced after 14 years. LTCG up to Rs 1 Lakh is exempt. However, tax and investment experts are of the opinion that there is no logic in levying the LTCG Tax as equity investor already pay STT (Security Transaction Tax) at the time of investment.

Income Tax Benefit to Home Insurance

Insurance penetration in India at 3.69 per cent is one of the lowest in the World. The insurance penetration in the non-life sector was a mere 0.93 per cent in 2017. Life and health insurance do have tax deductions under Sector 80C and Sector 80D, but there is no tax deduction on home insurance. A tax deduction for home insurance is the need of the hour. 

Increase in Section 24 limit

The Section 24 or income tax deduction up to Rs 2 Lakhs a year on home loan interest was last revised in 2014. With property prices rising, even a 2BHK flat in most cities costs more than Rs 60 Lakhs. With many home buyers availing home loans of Rs 50 Lakhs and above, this deduction needs to be hiked to at least Rs 5 Lakhs a year.