The middle class in both metro and semi-urban areas have big expectations from Budget 2017,

especially after it had to bear a lot of difficulties due to demonetisation. Finance Minister Arun
Jaitley can benefit the middle class in the Budget in several ways. These will not be mere
handouts to please the middle class. Tax incentives to the middle class turn into savings, get
invested and fuel growth.
Here are 10 things Jaitley can do in Budget 2017 for the middle class:
1. Raise minimum limit for taxable income
Currently, income above Rs 2.5 lakh is taxed. If the minimum limit is increased, it will not only
benefit taxpayers at the bottom but also middle-class youth who are starting out as employees.
2. Restructure tax slabs
A restructuring of tax slabs will be a big balm for the urban middle class. Currently, 10 per cent
tax is charged on annual income of Rs 2.5 lakh to Rs 5 lakh, 20 per cent on Rs 5 lakh to Rs 10
lakh and 30 per cent on income above Rs 10 lakh. The first two slabs can be widened or taxed
at a lower rate.
3. Raise exemption limit on allowances
Salaried employees enjoy exemption from tax on several allowances/benefits that the employer
provides such as children's education, conveyance, medical reimbursement, house rent and
leave travel. The allowance limits were fixed a long time ago and need to be revised in view of
inflation.
4. Increase deduction under Section 80C
Currently, deduction under Section 80C of the Income-tax Act is allowed from Rs 150,000 to Rs
300,000. If Jaitley increases the limit, he can boost household savings which can ultimately get
invested and power growth.
5. Raise exemption limit for senior citizens
The existing exemption limit of Rs 300,000 for senior citizens (60 years to less than 80 years)
and Rs 500,000 for super senior citizens (80 years and above) could be enhanced to Rs
400,000 and Rs 650,000 respectively.
6. Bring back deduction on infrastructure bonds
The government may reintroduce deduction of Rs 20,000 or actual amount invested, whichever
is lower, for investments made in infrastructure bonds. This will also boost spending, spur
growth and create more jobs.
7. Offer more incentives for NPS investment
Jaitley can offer more incentives for taxpayers to invest in the National Pension System (NPS).
He can increase the deduction under Section 80CCD (1B) to Rs 100,000 from the existing Rs
50,000. He can also being NPS on par with the Employees Provident Fund or Public Provident
Fund with respect to exemption of 100 per cent of the accumulated balance on withdrawal,
subject to certain conditions.
8. Offer interest subvention on home loans

Prime Minister Narendra Modi has already offered interest subvention of 3 per cent and 4 per
cent for loans of up to Rs 12 lakh and Rs 9 lakh, respectively, under the Pradhan Mantri Awas
Yojana. However, these subventions are targeted at buyers in Tier 3 cities. Budget 2017 has
scope of offering interest subvention on larger amounts of loan which will benefit buyers in big
cities and other urban areas.
9. Allow higher deduction on home loan EMIs
Currently, the deduction available on interest on home loan is up to Rs 2,00,000. The deduction
can be claimed on the principal repayment for up to Rs 1.50 lakh. There is a large scope in both
cases to raise the deduction limits.
10. Allow early deduction on home loan EMIs
Deduction for interest on home loan is currently available only after the buyer gets the
possession of the property. This means the benefit begins several years after the buyer gets the
home loan and begins paying the EMIs. This deduction can be given right from the payment of
the first EMI.