Tax Breaks expected from Budget 2017

There’s a reason why EVERY single adult looks at the Union Budget with great interest—it impacts them on a very personal level, and this is because the government often changes tax rules in the Union Budget.

So, here’s a look at the tax-related announcements that are expected from the budget 2017:

1. Increase in tax exemption limit
   Currently, if you earn less than Rs 2.5 lakh, you do not have to pay tax. This is called the ‘Tax exemption’ limit. Many expect the government to increase this limit.
   
   
2. Increase in deductions under Section 80C
   Section 80C of the Income Tax Act is the tax-payer’s safe haven. It helps lower your taxable income by up to Rs 2 lakh (Up to Rs. 1.5 lakh for regular investments such as Bank FDs, life insurance, tax-saving mutual funds, etc., and over and above that, Rs. 50,000 in National Pension Scheme). Many reports suggest the government could increase this limit. Even a small increase in this can offer great benefits. After all, even a Rs 10,000 investment today could reap returns tomorrow.
   
   
3. Separate deduction for home loans
   You can claim a tax deduction on your home loan repayment under Section 80C. So, if you repay Rs 1.5 lakh of the home loan principle, you need not show any other investments for tax saving. Reports suggest the government may increase the tax deduction limit by separating this from the Section 80C investments.
   
   
4. Increase in tax deduction on interest payment
   The above was for the principle component of your loan. You can also avail a tax deduction of Rs 2 lakh for the interest component of your loan. The government could consider hiking this limit to boost the realty sector.
   
   
5. Change in Income Tax slabs
   The government could also look at changing the tax slabs. Currently, you are taxed 10% if your income ranges between Rs 2.5 lakh and Rs 5 lakh; 20% if you earn between Rs 5 lakh and Rs 10 lakh and 30% if your income exceeds Rs 10 lakh. These income brackets could change.
   
   
6. Revision of allowances
   Certain components of your salary are not taxable. This includes components such as house rent, travel, etc. The government sets a cap on the maximum allowance possible. These could be changed too.
   
   
7. Increase in health insurance premium deduction limit
   You can lower your taxable income through your health insurance premiums as well as those of your family. However, the maximum deduction is Rs 55,000 for the general category. This limit can be hiked to encourage insurance-buying.

Keep watching this space to know how the Union Budget 2017-18 affects you