Here’s what experts and taxpayers want from finance minister Arun Jaitley’s third budget

Make NPS income tax free

Remove RGESS restrictions

Tax benefits on home insurance

Home loan, reverse mortgage rules

Revise limits or remove deductions

Amajority of taxpayers want Finance Minister Arun Jaitley to raise the basic exemption limit as also the tax deduction under Section 80C.More than half the 829 respondents to an online survey conducted last fortnight wanted the basic exemption limit to be raised to Rs 3 lakh. Another 43% wanted the limit to be linked to inflation and automatically raised every year. Only 5% of the respondents said the basic exemption and tax deduction limit should be kept unchanged. Taxpayers are divided over what kind of budget they want. Most taxpayers (45.4%) want a balanced budget that broadens the tax net without raising taxes, but some are looking forward to a growth budget (26.3%) while some others want a taxpayer-friendly budget (25%). Only a minuscule minority (3.3%) is willing to face a belt-tightening budget even though it may be harsh.This minuscule minority may find its wish come true this year. A Rs 10,000 deduction translates into a loss of Rs 3,000 crore to the exchequer. The Seventh Pay Commission has already put pressure on the government’s coffers so it is unlikely that Arun Jaitley will play Santa Claus this year. He is more likely to act like Robin Hood. Taxpayers want Jaitley to broaden the tax net to include rich farmers. Almost 40% also want a fourth tax slab of 40% for those earning more than Rs 40 lakh a year, while another 27% want an inheritance tax on wealth beyond a certain limit.We reached out to experts from the financial services industry for suggestions on the budget. Most of the experts want the investment limit raised. “The Indian investor’s equity allocation is very low and the budget should address this serious issue. We are hoping for a separate Rs 50,000 limit for ELSS funds,” says A. Balasubrahmanian, CEO Birla Sunlife Mutual Fund. Others have sought new tax deductions and more options for retail investors. There are also suggestions for amending the tax rules for key goals such as retirement planning and education savings for children. Here are 10 such ideas that would be beneficial for investors and taxpayers.The National Pension System (NPS) is a very good tool for retirement planning but the tax treatment is not favourable to investors. Right now, the scheme is treated as Exempt Exempt Tax (EET). “This is at a sharp disadvantage to the other major retirement products such as the EPF and PPF,” says Dhirendra Kumar, CEO of Value Research. The budget should give EEE status to the NPS to encourage retirement savings.Last year’s budget had introduced an additional deduction of Rs 50,000 for investments in the NPS. Mutual fund want to be part of this as well. “The additional investing limit should also include pension products from mutual funds,” says Chandresh Nigam, managing director of Axis Mutual Fund.The RGESS was designed to attract small investors to equities, but its restrictive nature has prevented it from making a meaningful impact. The scheme offers deduction under Section 80CCG to ‘first-time’ retail investors with an annual income of not more than Rs 12 lakh. Also, the deduction is only 50% of the invested amount, up to a maximum of Rs 50,000. “The Budget should remove these restrictions and make the scheme more broad-based,” says Prableen Bajpai, director of FinFix research and Analytics. There is also a need to encourage long-term investments in equities. “The Budget should introduce a deduction for SIP investors,” says Manoj Nagpal, CEO of Outlook Asia Capital.Several natural calamities damaged property and assets worth crores in different parts of India in recent years, but barely 1% of those assets were insured. “It is ironical that individuals who insure their factories and automobiles do not feel the need to insure their homes against calamities,” says Tapan Singhel, managing director and CEO of Bajaj Allianz General Insurance. Singhel believes that if tax benefits are extended to home insurance, people will be more willing to buy this critical cover.One critical change that tax experts want in the budget relates to the deduction on home loan interest. Under the existing rules, interest of up to Rs 2 lakh paid on a home loan is deductible if the taxpayer gets possession of the property within three years of taking the loan. However, most housing projects get delayed, which may lead to the buyer losing the tax benefit for no fault of his. The total tax benefit then gets reduced to Rs 30,000. “Given that the intent behind this tax benefit is to support housing, the deduction of Rs 2 lakh should be allowed if the delay is from the builder’s end,” says Archit Gupta, co-founder and CEO, Cleartax.Similarly, reverse mortgage is a useful tool for unlocking the value of real estate assets. Unfortunately, too many conditions have narrowed down the scope of reverse mortgage. “The Budget should relax the minimum age of borrower from the current 60 years as also remove the clause on self-occupied property,” says Sukanya Kumar, director of Retaillending.com. The loan-to-value ratio of reverse mortgage should also be freed from capping. “Calculating it on the basis of the current market value of the property is unreasonable,” adds Kumar.Jaitley and his team should also consider removing the web of exemptions and deductions, many of which have not been revised for decades. The education allowance for children stands at Rs 100 per month per child. Under Sec 80GG, a taxpayer who does not get HRA as part of his compensation can claim a maximum tax deduction of Rs 2,000 a month. “This capping of the deduction is unfair. The Budget should raise the limit to at least Rs 10,000 a month,” says financial planner Bhuvana Sreeram.