There are the five factors you should keep a track of while analysing budget 2018.
Experts tend to discuss the budget threadbare. Politicians give their views that suit their stand. And market participants too try to discuss their positions and how they worked or misfired post budget. There is a case of information overload for the common man. For an individual investor who is in his early years of earning life should, however, not miss what matters the most. Here are five such things related to his annual income that he should be checking post announcement of Budget 2018:
Basic Exemption Limit
As per extant rules, one need not pay income tax if his annual income is less than Rs 2.5 lakh per year. The finance minister may choose to increase the basic exemption limit. This will cut the tax liability for all those who are earning more than Rs 3 lakh.
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There is a popular demand that the rate of tax till Rs 10 lakh should be reduced to 5%. If the finance minister chooses to relent it will be cut the tax liability of all those who are earning above the basic exemption limit. Keep a tab on any development on this front.
While revising the tax slabs, Budget 2005 removed the concept of standard deduction, which was capped at Rs 30000. However, there has been a constant demand to bring back standard deduction. To accommodate the inflation, the standard deduction should be around Rs 1 lakh per financial years, the advocates of standard deduction say.
Increase in exemptions
This is high possibility prediction by most experts on a budget, this time. There is a fair chance that the finance minister may increase the exemption amount allowed under section 80C of the Income Tax Act. The extent limit of Rs 1.5 lakh may be revised to Rs 2 lakh in a year. There is also a demand that the health insurance premium tax exemption. All such increase effectively save your tax outgo. Keep watching.
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Changes in tax saving instruments
There is a possibility that the finance minister may change the lock-in tenure, tax treatments of existing tax saving instruments. There is a possibility that the finance minister may launch a new tax saving instrument such as long-term infrastructure bond. Such changes must be studied carefully and the savings should be accordingly channelized to optimise your tax outgo and investment success.One should avoid any kind of anxiety ahead of Budget and avoid these mistakes
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