Finance Minister Nirmala Sitharaman is set to present the Union Budget 2024 on July 23, 2024. The Modi 3.0 government is expected to provide relief for salaried and middle-class taxpayers. Here are the top income tax expectations and expert recommendations:
- Changes in the New Income Tax Regime
Experts suggest making the new income tax regime more attractive by adjusting the income tax rates and slabs. They recommend that the 30% tax rate should only apply to incomes above Rs 20 or Rs 25 lakh, instead of the current Rs 15 lakh threshold.
- Section 80C
There is hope that the Section 80C exemption will be included under the new tax regime. Since the limit of Rs 1.5 lakh has not been revised since 2014, experts also request an increase to Rs 3 lakh to encourage savings.
- Standard Deduction
Personal tax experts agree that the standard deduction limit of Rs 50,000, introduced last year, should be increased to Rs 1 lakh. This change is crucial as the limit has not been updated since the financial year 2019-20.
- Basic Exemption Limit
To encourage more taxpayers to choose the new income tax regime, experts recommend increasing the basic exemption limit from Rs 3 lakh to Rs 5 lakh. Additionally, some propose raising the limit for tax rebates from Rs 7 lakh to Rs 8 lakh.
- Section 80TTA for Bank Interest
Experts believe that the current exemption limit of Rs 10,000 for interest on bank deposits is too low and should be increased. They also suggest that term deposits and fixed deposits 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 and encourage people to prioritize their health.
- Housing Loan Deductions
There is a demand to raise the limit for deductions on interest paid towards housing loans for self-occupied property from Rs 2 lakh to a minimum of Rs 3 lakh. Experts also want this included under the new tax regime.
- Rationalize Capital Gains Tax Structure
Experts note that the current capital gains tax structure is complicated and inconsistent. They expect the government to propose a streamlined regime, possibly with adjusted tax rates and simplified computation methods.
- TCS on LRS Transactions
In Budget 2023, the TCS rate was increased from 5% to 20% for certain transactions to curb foreign exchange outflow. However, this has caused cash flow problems for many individuals. Experts recommend lowering the TCS rate from 20% to 10%.
- Streamline E-Filing:
Experts suggest making the online grievance resolution system for income tax returns more user-friendly. They also recommend simplifying the income tax filing process to ease the burden on taxpayers.
These recommendations reflect a widespread desire for a more taxpayer-friendly system that encourages savings, health investments, and property ownership while simplifying the tax process.
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