Budget 2024: Finance Minister Nirmala Sitharaman will present the Interim Budget 2024 tomorrow, 1 February. The upcoming budget will be an ‘interim’ one as the government faces a general election this year, in April-May. The full budget will be presented in July by the incoming government, whether a re-elected or new one. The middle class is eagerly awaiting some income tax reforms that would enable them to curtail their tax outgo. The middle class is expecting that there will be a rise in some tax exemption limits available under various sections like, Section 80C, and Section 80D.
1)Rebate in the Income Tax
The middle class is expecting a rejig in the income tax exemption limit from ₹2.5 lakh to ₹5 lakh. Finance Minister Nirmala Sitharaman while presenting Budget 2023 on 1 February 2023, tweaked the slab rates for individuals opting for the new income tax regime.
-No tax would be levied for income up to ₹3 lakh
-Income between ₹3-6 lakh would be taxed at 5 per cent
-Income between ₹6-9 lakh would be taxed at 10 per cent
-Income between ₹9-12 lakh at 15 per cent
-Income between ₹12-15 lakh at 20 per cent
-Income of ₹15 lakh and above will be taxed at 30 per cent.
The current limit of ₹1.5 lakh for investment deductions under Section 80C, which has not been updated in over a decade, should be increased to allow for greater tax savings and increased investments. “The earlier limit of ₹1 lakh was fixed way back in 2003. It has been almost 18 years since the original limit of ₹1 lakh was fixed. It has only been increased by 50% in 2014 which works out to just less than 3% annually. This annual average increase is not even on par with average inflation during the same period. In my opinion, this should be directly raised minimum to ₹2.50 lakh,” said Mumbai-based tax and investment expert Balwant Jain
3) Raise in standard deduction
The Finance Act 2018 introduced a Standard Deduction from salary of ₹40,000 which was increased to ₹50,000 in 2019. Now, in the wake of rising costs of medical expenses and fuel, there is a strong case for increasing the standard deduction limit from ₹50,000 to ₹1 lakh.
4) Relief for homebuyers
As per present provisions of Section 80 C of the Income Tax Act, you are allowed to claim a deduction of up to ₹1.5 lakh from your taxable income, for the repayment of the principal amount of a housing loan taken for a residential house. This deduction is available along with other eligible items of expenditure, such as life insurance premiums, tuition fees, contributions to Provident Fund and Public Provident Fund and EPF, investments in ELSS, National Saving Certificates, tax saving bank FDs, etc.
“Given the overcrowding of Section 80 C, 80CCC, and 80CCD(1) and the need for larger home loans, the finance minister should provide a separate deduction for repayment of home loans, in the ensuing budget. A leaf can be taken from Section 80EEA, under which a separate deduction was introduced in 2019, for interest on home loans for first-time home buyers,” said Balwant Jain.
According to Archit Gupta, Founder, and CEO, of ClearTax, the deduction limit under Section 80D for medical insurance premiums should be increased from ₹25,000 to ₹50,000 for individuals and ₹50,000 to ₹75,000 for senior citizens, reflecting rising healthcare costs. Extending Section 80D benefits to the new tax regime would promote equitable access to healthcare.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
More
Less
Published: 31 Jan 2024, 12:22 PM IST
