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Even though this is an interim Budget, the NDA government may offer big tax cuts to woo the middle class before the general elections.ET Wealth reached out to taxpayers and financial experts to know what they want or expect to see in the Finance Bill 2019.Tax collections from dividends was Rs 43,410 crore in 2016-17.Of this, Rs 41,417 crore came from company dividends and Rs 1,993 crore from mutual fund dividends. ET Wealth did some number crunching and found that the effective tax rate for incomes below Rs 50 lakh has not changed much since 2009-10 Senior citizens should be provided a deduction or reimbursement for medical expenses (purchase of medicines), which is more important than the deduction for medical insurance premium under Section 80D.A rate cut and widening of tax slabs will reduce your tax outgo.
There could be an increase in standard deduction from Rs 40,000 to Rs 50,000.
They say that companies pay taxes and pay dividends out of post-tax profits, so it is unfair to tax this dividend again when it reaches the taxpayer.
While the government needs to review the dividend distribution tax on mutual funds, doing away with dividend tax on corporates may not be feasible.
It could become a permanent retirement account from which investments across multiple asset classes can be made annually.
Considering inflation, a hike in limit for tax deductible savings is justified, but would result in a big tax loss.What experts expect The Sec 80C limit could be raised to Rs 2.5 lakh or even Rs 5 lakh.