5 changes to make Budget 2016 taxpayer’s delight!

Our Finance Minister has a tough job keeping government’s tax revenue and borrowing in check, and an empathetic view is what he needs. But ask we must and here’s what the Finance Minister could do with his Budget for this year to make it a taxpayer’s delight.
1. Raise section 80C deduction limit
Section 80C by all means is the ‘baap‘ of tax deductions. It knocks off Rs 1.5lakh from your income. But this limit has remained so since financial year 2014-15. By adding a new tax saving product and raising the limit to Rs 2 lakh, the Finance Minister could kill two birds with one stone — help taxpayers save more as well as garner funds to invest for growth. There has been talk of raising the minimum exemption limit which has been kept at Rs 2.5 lakh since financial year 2014-15. But the government is trying to bring in more and more people to file their returns, and raising the exemption limit would lead to fewer people in the tax net. And therefore it is unlikely they’ll take that step.
2. Bring back tax exemption on infrastructure bonds
Until financial year 2011-12, a deduction of Rs 20,000 could be claimed for investment in infrastructure bonds. This was allowed under section 80CCF. The bonds were invested over the long term. These bonds could be vital to help fuel economic growth and the government must consider reviving this deduction.
3. Increase tax exemption on medical reimbursement
A medical reimbursement of Rs 15,000 is usually not enough to meet the routine medication and consultation needs of a family. Reimbursement allowed on the basis of actual bills through the employer should be raised to at least Rs 30,000. Section 80D deduction was raised in the last budget. Under Section 80D, medical insurance is provided to cover hospitalisation. Raising the reimbursement limit would help families cover regular medical needs, which do not involve hospitalisation.
4. Give NPS EEE (exempt, exempt exempt) status
NPS (National Pension Scheme) is a pension fund where investments up to Rs 50,000 are eligible for deduction under section 80CCD(1B). Its returns are also exempt from tax. However, withdrawals at the time of maturity (after attaining 60 years of age) are taxable. This makes the product uncompetitive against other products like PPF, which enjoys immense popularity as a long-term savings option. Making NPS exempt at withdrawal will give it the much-needed push.
5. Allow professionals to file under Section 44AD
A professional –a doctor, or a lawyer, or an interior designer, for example — is required to maintain proper books of accounts and file the long income tax return form ITR 4. To ease the burden of financial compliance the government must consider allowing professionals below a reasonable threshold of revenue to file the shorter ITR-4S. This can be done by amending section 44AD. As per this section, accounting records are not required to be maintained and income is considered as 8% of the revenue.