Budget 2014: How it will Impact Tax for Middle and Lower Class People in India?

The Union Budget for the year 2014-15 is the first one that our new Finance Minister Mr. Arun Jaitley will unveil in a few days. For the newly formed government, the challenges and expectations are abundant. The BJP-led NDA government needs to do a powerful balancing act between adopting pro-people programs and resorting to tremendous reform push. 

The government led by Mr. Narendra Modi has the huge task to meet the anticipations related to corporate houses, foreign investors and the common man of the country. It is also very important for the government to get rid of problems like high inflation regime and corruption so that the investors’ confidence can be regained. It wouldn’t be wrong to say that the Indian budget 2014 is one of the most anticipated ones in recent times.

The Budget 2014 will surely impact the middle and lower class people in India and it remains to be seen which sectors will see the most number of changes. The Indian tax system is a comprehensive web of formalities, which affects the lower class people in a big way and, therefore, the government needs to concentrate on the DTC (Direct Tax Code) and implement the GST (Goods and Services Tax) system, which will definitely make the Indian tax regime simple, accountable and transparent. The government needs to push through several reforms for making the nation an investment friendly one.

Tax Relief:

Have a look at some of the major points which could be taken up by Mr. Arun Jaitley regarding tax relief for middle class people in India.

1. For individuals, the basic exemption limit of the tax can be raised from Rs 2,00,000 to Rs 3,00,000. For senior citizens, the limits should be raised from Rs 2,50,000 to Rs 3,50,000. This would surely help the finance minister in compensating all the tax payers for the superior level of inflation that has had a negative impact on the economy as a whole. It will also help in increasing the purchasing capacity of the individuals.
2. The deduction limit on income tax under section 80 C can be increased from Rs 1,00,000 to Rs 2,00,000. This will help in stimulating forced investments and savings.
3. The medical insurance premium deduction under section 80D which is at present capped at Rs 15,000 for spouse, self and kids and Rs 20,000 for guardians must also be revised, considering the medical inflation.

In addition to the direct taxes which are borne by the salaried class individuals, the indirect taxes like excise duties, service tax, VAT and sales tax pinch the pockets of the employees as well. A restaurant bill of Rs 1,000 becomes Rs 1,300 and this is why the finance minister needs to offer some tax relief under the indirect tax codes as well.

It would be appropriate to say that only a pragmatic approach can help the government form a union budget that allows sustainable growth to take place in the country. By studying these points about Indian budget 2014, you’ll get a better idea regarding how it will impact the middle and lower class sections of the society.