What are some of the major expectations of individuals from the Union Budget 2020? I am talking about primary demands?

Expectations from Budget and Current Govt. who is active in all segments and known to make bold decision

1. Enhancing Individual Income-tax Brackets - Nil Tax for all on income up to Rs.5Lacs and 10% for income between 5Lacs to 10 Lacs and 20% for income between 10Lacs to 15 Lacs and 30% above 15Lacs

2. Removal or Reduction of DDT & LTCG - Removal of DDT & LTCG on Equity and / or Equity & Hybrid Mutual Funds if investment held for more than 5 years i.e. 15% tax on profit if held for less than 1 year, 10% tax on profits if held for1 year and above but less than 5 years

3. Transaction Tax - Any transaction beyond Rs.10000 should be made online or through electronic mode only. Increase in transaction tax so every individual making financial transaction ensures he pays tax irrespective of he being salaried / self employed / business. PAN mandatory for any purchase of more than Rs.1Lac

4. Section 80C and Promoting Household Investment

Separate deduction for wealth creating financial products like PPF, EPF, ELSS, Bank FDs, Post Office Saving Products, etc. Inclusion of other products like Major Index ETFs, Major Index Funds, CPSE ETF under this category

Separate deduction for expenses like home loan principal amount repayment, Childs tuition fees, Inclusion of expenditure on regular medicines for family members at least up to Rs.30000 per annum

Clubbing of Life Insurance Premium and Health Insurance Premium u/s 80D and enhancing limit from Rs.75000 per annum to Rs.1.5Lacs. Making Term Insurance of Rs.25Lacs and Health Insurance of at least Rs.3 -5Lacs mandatory

5.

Luxury Goods & Services

Increase in taxation on Luxury Goods & Services like stay and food in 4-Star and above, Luxury Cars, Branded Clothes, etc.

6. Increase Govt. expenditure on Education, Infrastructure, Defence and Research

You will recollect that the Finance Minister had lowered the rates of corporate taxes from 30% to 22% for domestic companies in September 2019. This lowering of corporate tax rate triggered hopes of some relief on the personal income tax front in this Budget 2020. Here are some of the key expectations of individuals from the Union Budget 2020.

a) It is expected that incomes up to Rs500,000 will be made fully tax free (in lieu of rebate offered currently) and the rate of 5% tax may be extended up to taxable income of Rs.8 lakhs.

b) There are also expectations of a rationalization of dividend distribution tax. When the company distributes surplus profits to shareholder it pays DDT at 20.56% and this is not an admissible expense. Withdrawal of the DDT will remove the cascading impact of taxation. Government is expected to tax dividends at a concessional rate.

c) Long term capital gains (LTCG) on listed securities at 10% on top of STT amounts to double taxation and it goes against the spirit of the introduction of STT in 2004. While scrapping of STT looks unlikely considering its simplicity and contribution of $1 billion each year, this budget could look to exempt LTCG on equity and equity funds.

d) Some tweaks are expected on home investments too. The limit under Section 24 may be hiked from Rs.2 lakhs to Rs.3.50 lakhs. In addition, the special deduction of Rs.150,000 may be extended to all home buyers rather than just for low cost homes up to Rs.45 lakhs in value.

e) Apart from increasing the limit of Section 80C, the budget is also expected to enhance social security by increasing limit for NPS from Rs.50,000 to Rs.1 lakh. Also, it is expected that pension funds of MFs and insurance companies may also be added to this list over and above NPS.