From the time we are born, whether we are aware of it or not, we function in our daily lives, with a sense of security; a feeling that we are taken care of. This sense of security starts with our parents and then as we mature and our needs change the government steps in as the providers of our “sense of security” by taking care of our standard of living. As the saying goes, “A government of the people, by the people, for the people”, spoken by Abraham Lincoln, holds true till date. A government’s basic function is to take care of its citizens, just as parents take care of the child from its birth, except the government’s family is its citizens. The sense of security a government provides its citizens is vital to a thriving nation. With the upcoming Budget 2018, the government can review its current tax savings schemes, available for its citizens, and further lessen the burden of the people, during this era of constant and never-ending change.
Childcare Education Deductions – Starting from the first stage of life, childhood, the education of children is of utmost importance, for they are the future of the country. Therefore, the government has tax deductions in place to help parents with the ever-increasing costs of education. At present, the deductions available under section 80c for children’s education is Rs 1,50,000, which covers only tuition fees. However, the total fees paid includes a wide range of other expenses, such as hostel, mess, transportation etc., which could also be included in the upcoming Budget 2018, in the available deduction, thereby alleviating/reducing the expenses shouldered by parents.
The Sukanya Samruddhi Yojana: The scheme introduced by the government, is a commendable effort by the government to ensure the girl children of the country are cared for. Although, making the maturity amount tax free is thoughtful, the deductions available for the scheme, can be made separate from the deductions available under 80C, as it may increase adoption of this investment scheme, while aiding the government’s goals. Finally, the tax saving schemes, for this stage of life, might be improved upon with the introduction of an Education Savings Plan, which we are lagging in, when compared to our counterparts across the world. An education savings plan would ensure a child’s higher education in the future, while helping the parents in the present, in the form of tax deductions.
Reduction in Income Tax Percentage: In the second stage of life we enter adulthood and become functioning and thriving members of society. By entering the workforce, we become responsible tax abiding citizens. Although, India is in second place for the largest populated country, our personal income tax rate is amongst the highest in the world. The past couple of decades has underwent more changes in the way of life than ever before. Therefore, the tax percentage on the annual income tax brackets can be reduced, in the upcoming Budget 2018, to reflect the lifestyle of the society and its citizens, whose standard and costs of living have increased.
Additionally, more tax investment schemes could be introduced, which would reduce an individual’s taxable income bracket such as the Infrastructure bond, which had a previous limit of Rs 20,000, could be made available again with an increased limit. Re-introduction of this bond would be a win-win for both taxpayer and the government. Adoption of this tax saving bond would help the taxpayer reduce their tax liability, while the adoption of this bond would help the government in aiding its infrastructure goals, while boosting the employment sector.
Deductions u/s 80EE: A milestone in the second stage of life is becoming home owners. As first-time home owners, buyers can avail of deductions under section 80EE, which allows deductions on interest paid on home loans up to a maximum of Rs 50,000/year, for first time buyers. However, this deduction is not available on a regular basis (available to the loan sanctioned in 2016-17 only) and the government may want to consider offering the deduction on a more permanent basis.
Improvements to Deduction u/s 80D: Finally, as the third and second stages of life blend and dependents become caretakers, the provisions and deductions available for both these groups of people can be improved upon. The health care insurance premium deductions available under section 80D at present is Rs 25,000 for self, spouse, and children. A deduction of Rs 30,000 for dependent parents, including senior and super senior citizens is also available. This deduction also allows for Rs 5000 for preventive health checkups, which include tests and diagnostics. Therefore, a taxpayer has the option of availing of a maximum deduction of Rs 60,000. However, a modification can be made to this scheme in the upcoming Budget, where preventive health checkups deduction can be increased to the maximum limit of Rs 25,000 and Rs 30,000 correspondingly, since people are becoming increasingly health conscious and are taking strides in ensuring they live a long and healthy life by embracing spa/massage treatments, yoga, physiotherapy treatments etc. So, limiting the preventive health checkups to tests and diagnostics and only allowing for a deduction of Rs 5,000 is not in sync with the evolving citizens of the country.
Senior Citizens: Additionally, as per the current laws, u/s 80D and 80DDB there is a distinction between seniors and super senior citizens (above 80 yrs) and the amount of deductions available to each group. The new Budget might want to consider removing this differentiation and allowing the maximum deduction of Rs 80,000, which is currently only allotted for super senior citizens. Lastly, the government of the people should reflect the values of the people. While, we have many deductions available for parents contributing to the betterment of their kids, unfortunately we do not have any deductions available for the children who have become caretakers of their ageing parents. We are a country known for tight knit family bonds and as such, the government should seriously consider introducing a scheme where children could open retirement savings plans for their parents, which would be eligible for tax deductions. Introduction of such a scheme in the upcoming Budget 2018 would encourage the younger generation to follow the tradition of caring for the elderly parents, while maintaining the welfare of the parents.
From the beginning of our life to the end of our life, we are constantly surrounded by the protection our family and the government ensures us. This sense of security and the feeling of being cared for at every stage in life, adds to the contentment and ease of living, for without this, we would, without a doubt, be able to decipher the loss of its availability. As the government prepares for the Budget 2018, which will be announced in February 2018, it needs to examine and evaluate the needs of its citizen so that the changes announced ensure their safety, security and wellbeing.