Income Tax Expectations: What can Budget 2024 do for salaried, middle class taxpayers and common man?
The Indian government is set to present the Union Budget 2024 on July 23, 2024, with a focus on providing relief to salaried, middle-class taxpayers and the common man. Here are the top income tax expectations and expert recommendations for Budget 2024:
New Income Tax Regime: The new income tax regime may become more attractive by adjusting the income tax rates and slabs. Experts suggest that the 30% tax slab should apply to incomes above Rs 20 or Rs 25 lakh instead of the current Rs 15 lakh threshold.
Section 80C: One of the expectations is to include 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.
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.
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.
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.
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.
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.
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.
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.
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.
These are the top income tax expectations and expert recommendations for Budget 2024. The government is expected to consider these suggestions to provide relief to taxpayers and encourage more people to opt for the new income tax regime.
