Some old complaints from savers and investors that must be repaired by the Minister of Finance in this budget are the time of the year when various people wrote a letter to Santa Claus, asking for the prizes they wanted.
Obviously, since Christmas has disappeared, I actually talked about the union budget and the demands made in the Minister of Finance.
Some of them are various industries and sectors who want some of their agreements, so to speak, change, although in the GST regime only non-tax problems are handled in the budget.
Then there is a media, which includes busybodies like me, who wants something or another to do for a portion of the population.
Last year, there was nothing, for obvious reasons.
In fact, looking back on January 2021, I noticed that in two decades I began writing openly about personal financial problems, last year was the only one when I hardly had anything to say.
In many ways, this union budget brings two years from the agenda interrupted with it even though with most countries still in some levels of covid restrictions, we have not fully returned to normal.
However, coming to various budget terms can and must be done in personal financial space, traditional annual demand has increased from the 80C tax savings limit.
However, in recent years, there has been some kind of solution between the types of tax-saving which is important to the upper middle class and what can even be offered 80C is quite large.
Sounds strange? Well, look this way.
Say the 80C limit was raised from Rs 1.5 lakh to Rs 1.75 Lakh, which was a big change.
If this happens then those who are in the highest tax bracket will see their monthly tax bills only around Rs 700.
For anyone who produces more than a month, it is not even a real amount.
For those who have lower tax brackets, the similarities are similar, except that the investment-to-effective ratio is worse.
So, is the increase in 80C irrelevant? Not all! What you save in 80C returns to you, with a few, a few years later.
Not only that, for many people, it acts as a gateway to a lifetime of savings habits.
The real story is that the increase in the 80C tax savings limit has a large downstream impact on people’s lives that have nothing to do with tax savings in the year.
Most taxpayers fully utilize 80C as far as possible.
For many people, this investment through ELSS funds, which is the gateway to become a long-term equity investor.
Tax saving limits RS 25,000 or 50,000 extra has a large multiplier effect on total lifelong savings that tend to be made, and a clear follow-up effect on the comfort and happiness of general age.
Actually, to increase this effect, reforms that are very much needed in the tax savings law are limiting the 80C section for savings and investment.
At present, other non-savings expenditure items such as education insurance and the term are also prepared to 80C.
It must have their separate limit.
Other pain in the tax policy that affects savings and investment is a tax increase in capital for long-term savings.
From February 2018 and so on, the increase in capital was subject to taxes at an additional cost of 10 percent, coupled with the annual free bound of Rs 1 Lakh rise.
There is nothing wrong with the tax itself but not like a tax increase in long-term capital on other types of assets, no indexation.
Part of the increase in nominal capital is consumed by inflation.
If you invest in debt funds, this can be turned off but if you invest in equity, this is ignored.
This is a strange anomaly and needs to be removed.
In addition, the tax-free limit of RS 1 Lakh must definitely be revised upwards.
Four years have passed and the true value of RS 1 lakh is much less.
Of course, tax-saving investment goals are not only to provide some trivial tax discount, but to encourage savings in a way that leads to the original improvement of the future of the community and old age.
Small anomalies can beat these goals and need to be reduced proactively.
(The author is the founder and CEO of the research value)