Budget is an opportunity for this government to reward and motivate honest taxpayers and the middle class by allowing them to save, more which can help in channelising savings into high priority infrastructure sector as we have experienced in developed markets.
Deductions allowed under Section 80C can be expanded for more investment options with an increase in the limit and help in increasing the tax base. NPS is a step in the right direction and we should encourage people in job and business to save more in the same by increasing the tax exemption and it could be extended for Mutual fund’s offering children and retirement schemes.
The government should encourage young millennial to save more on the lines of US 401k concept which can help in building corpus for future financial freedom.
Tax structure in equity investments like stocks and mutual funds should be aligned more with long term investing objective and investors investing for more than five-years should be rewarded with indexation and tax benefits. Current equity taxation structure in stocks and MF for long-term capital gain, definition needs to be expanded from 1-year to 3-years as it will help in setting the right expectation from this asset class. Current structure of 1 lakh exemption for long-term capital gains should be increased in order to motivate investors to save more.
Healthcare industry has been becoming more and more expensive and is forecasted to rise even in the future. This budget should encourage people to spend on healthcare by increasing the limits of mediclaim as well as life insurance.
The housing and construction sector is going through turbulent times and as we all know multiplier impact the sector has for the economy so tax breaks for housing and construction should be relooked to support this sector.
As we all know coach is required for handholding and putting the right habits in the same way financial planners and advisors help in building the right habits and discipline for individuals and me strongly feel there fees should be allowed as an exempted amount as this can encourage more savers to avoid accidents and help save in a structured manner and get this profession rightful place.
The author is Founder and CEO, TBNG Capital Advisors
