Income Tax Expectations
Budget 2024: Finance Minister Nirmala Sitharaman will present the
Union Budget 2024
on July 23, 2024 and the Budget is being looked at for relief to salaried, middle class taxpayers and also the common man.
What can you expect from the Modi 3.0 government’s Budget 2024? What are the top expectations from an income tax perspective and what do the experts recommend? We take a look:
1.
Changes in New Income Tax regime:
The new income tax regime could be made more attractive by rationalizing the income tax rates and slabs, according to experts. They suggest that the 30% tax slab should be applicable for incomes above Rs 20 or Rs 25 lakh, instead of the current Rs 15 lakh threshold.
2. Section 80C: One of the expectations is the inclusion of Section 80C exemption under the new income tax regime. Additionally, since the limit of Rs 1.5 lakh has not been revised since 2014, there is a request to increase it to Rs 3 lakh to encourage savings.
Also Read | How can Budget 2024 make the new income tax regime more attractive for salaried taxpayers? Top points from TOI Online tax experts’ survey
3. Standard Deduction: Personal tax experts unanimously agree that the standard deduction limit of Rs 50,000, introduced in the
new tax regime
last year, should be increased to Rs 1 lakh. This revision is particularly crucial as the standard deduction limit has not been updated since the financial year 2019-20.
4. Basic Exemption Limit: To encourage more taxpayers to opt for the new income tax regime, personal tax experts recommend increasing the basic exemption limit from Rs 3 lakh to Rs 5 lakh. Additionally, some experts propose raising the limit for tax rebate from Rs 7 lakh to Rs 8 lakh.
5. Section 80TTA for bank interest: Tax experts believe that the current exemption limit of Rs 10,000 for interest on bank deposits is insufficient and should be increased. Moreover, they suggest that term deposits and fixed deposits should also be included under this limit.
6. Section 80D for health insurance: Salaried taxpayers
are requesting an increase in the health insurance premium deduction under Section 80D from the current limit of Rs 25,000 to Rs 50,000 or even Rs 1 lakh. This change would offer relief to taxpayers and motivate them to prioritize their health, which is especially important in the present circumstances.
Also Read | Income Tax Expectations Budget 2024: What are the ideal new tax regime slabs, rates for middle class, salaried? TOI Online Survey findings
7. Housing Loan Deductions: There is a demand to raise the current limit for deduction on interest paid towards housing loan for self-occupied house property from Rs 2 lakh to a minimum of Rs 3 lakh. One ask is also to include this under the new tax regime.
8. Rationalize capital gains tax structure: Experts note that the government recognizes the intricacies in the current capital gains tax structure, which suffers from inconsistencies in tax rates and holding periods for various instruments within the same asset class. Moreover, the indexation benefit is not uniformly applied across different scenarios. They anticipate that the government may propose a streamlined capital gains tax regime, possibly involving adjustments to tax rates and computation methods.
9. TCS on LRS transactions: In Budget 2023, the TCS rate was increased from 5% to 20% for certain transactions to curb the outflow of foreign exchange. However, this sharp increase has had a significant impact on many individuals, including employees. The 20% TCS on amounts sent abroad exceeding 7 lakhs for maintenance purposes is causing substantial cash flow problems. Experts recommend lowering the TCS rate from 20% to 10% to alleviate this burden.
10. Streamline e-filing: Experts suggest that the online grievance resolution system for income tax return filing should be streamlined to make it more user-friendly. They also recommend further simplifying the income tax filing process to ease the burden on taxpayers.
