The government has been trying to make the tax laws simpler every year; however, there are numerous amendments required in the tax laws. The union budget for the FY 2013-14 will be presented before the Parliament on 28th February 2013 and the finance minister has promised many reforms expected to combat inflation along with stable tax rates.
There may also be some changes in the tax slabs to provide some relief from the ever-growing inflation. Here are a handful of the number of amendments expected and predicted by analysts in the Union Budget for 2013-2014.
Rent Allowance :
All those people who do not have their own house and stay in a rented accommodation or employees who do not get accommodation or house rent allowance from their employer enjoy a special tax deduction on the rent paid by them. This deduction is allowed under section 80GG of the Income Tax Act in which an individual can avail 25% deduction on the rent amount. However, the limit is restricted to Rs 2000 per month and has not changed for many years, which is now expected to change this year.
Moreover, under the Income Tax Act 1961, there exist 2 dissimilar sets of tax treatments with reference to rent free lodging provided by the employer. While a Government employee only pays the license fee, non government sector employees who get rent-free lodging from their employees are taxed heavily at 7.5-15% of the salary. There is a necessity to maintain uniformity in taxes and a new system needs to be introduced offering equal rights to employees without discrimination.
Standard exemption should continue as in the past and should be given to all employees who are salaried, while the transport allowance deduction should increase.Capital Gain Scheme :
There may also be some changes in the tax slabs to provide some relief from the ever-growing inflation. Here are a handful of the number of amendments expected and predicted by analysts in the Union Budget for 2013-2014.
Rent Allowance :
All those people who do not have their own house and stay in a rented accommodation or employees who do not get accommodation or house rent allowance from their employer enjoy a special tax deduction on the rent paid by them. This deduction is allowed under section 80GG of the Income Tax Act in which an individual can avail 25% deduction on the rent amount. However, the limit is restricted to Rs 2000 per month and has not changed for many years, which is now expected to change this year.
Moreover, under the Income Tax Act 1961, there exist 2 dissimilar sets of tax treatments with reference to rent free lodging provided by the employer. While a Government employee only pays the license fee, non government sector employees who get rent-free lodging from their employees are taxed heavily at 7.5-15% of the salary. There is a necessity to maintain uniformity in taxes and a new system needs to be introduced offering equal rights to employees without discrimination.
Standard exemption should continue as in the past and should be given to all employees who are salaried, while the transport allowance deduction should increase.Capital Gain Scheme :
To save capital gain, an individual can invest in capital gain bonds according to section 54EC of the Income Tax Act. The upper investment limit under this section is Rs. 50 lakh. In the past, there was no such cap and all transactions related to property were done with white money. With the government making changes to this law few years ago and placing a limit, people have been resorting to unwanted ways to save tax. This cap, hence, is expected to be removed in the forthcoming budget.
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