Union Budget 2020 is round the corner. What are the expectations and what’s the atmosphere like? Read and find out below.
It feels like Economics is in the air. Common people are suddenly transforming into Amartya Sens and Abhijit Banerjees (basically Economists). News channels are boasting financial concepts as if they are communicating directly with the Finance Minister of India every day. Almost everyone is waiting for the ‘D-day’ when Ms. Nirmala Sitharaman, our Finance Minister will present the Union Budget 2020.
Like every year, the Television Rating Point (TRP) would surge dramatically as they telecast the complete presentation of budget. People will get glued to their TV screens before the start of the budget. In fact, the news channels will leverage this opportunity by reporting even petty things like “FM is ready to set out from her residence” as ‘Breaking News’. People will watch all of it with high hopes because expectations are high as union budget 2020 inches closer.
Expectations vs Reality
No, we are not referring to the meme (or maybe we are in a way. You may consider it depending on your past experience with union budgets). Once again, expectations have started pouring in from all walks of life. The salaried individuals are expecting amendments in the income tax rates and slabs while other individual tax payers are expecting increase in deduction under section 80C. Let’s try and understand the expectations in detail.
The current income tax slabs and rates are as follows:
Individuals with income up to Rs. 2.5 lakh are exempted from paying tax. Those earning between Rs. 2.5 lakh and Rs. 5 lakh fall in the 5% slab. Similarly, individuals earning between Rs. 5 lakh and Rs. 10 lakh and those earning more than Rs. 10 lakh fall under the slabs of 20% and 30% respectively.
Reportedly the slabs and rates might change in the upcoming budget. The new slabs are expected to be Rs. 2.5 lakh to Rs. 7 lakh, Rs. 7 lakh to Rs. 10 lakh, Rs. 10 lakh to Rs. 20 lakh, Rs. 20 lakh to Rs. 10 crore and above Rs. 10 crore. The rates for these slabs would be 5%, 10%, 20%, 30% and 35% respectively. The introduction of the new rates and slabs would result in substantial savings for the salaried individuals.
Besides this, expectations are also high for increasing deductions under section 80C. Current deductions for various common tax saving investments or expenditure is capped at Rs. 1.5 lakh per annum. This is expected to be increased to up to Rs. 3 lakh. But, would this be executed as it is? That’s the ‘reality’ part which we would only come to know on the day of the budget.
What’s Actually Required?
As per the experts, a consumption wave is required to boost the slowing down economy. The aforementioned expectations are also on the same line.
But, just to be frank enough, this takes place every year and if we think it through, does it have a major impact on our lives? Logically, a union budget is supposed to guide us in a way that we amend our personal budgeting to go with the flow.
But, what we see is the same old thing – Finance Minister presenting the budget patting his/her own back along with showering praises on the ruling party, opposition party members opposing almost every point and trying to prove that they would handled things in a much better way and some members of parliament even taking a nap while the budget is being presented!
Anyway, we need to wait for the actual announcements that would be made in this year’s budget. Based on that you could plan your finances ahead. And, we’ll keep you posted.