As the Budget Day – July 23rd approaches, anticipation is growing for Finance Minister Nirmala Sitharaman’s presentation of Budget 2024. Tax experts and taxpayers alike are hopeful for significant changes that could bring relief and encourage savings. Here are some of the key expectations:
The standard deduction, which has remained at ₹50,000 since 2019, may see an increase. Experts suggest it could rise to ₹60,000 or even ₹70,000, benefiting salaried employees by reducing their taxable income. The Section 80C exemption limit, which allows salaried individuals to reduce their taxable income by ₹1.5 lakh, has not changed since 2014. Experts believe it is time for an increase to help taxpayers manage inflation and boost investments in financial instruments like ELSS, tax saver FDs, and PPF.
Income Tax Exemption Limit
There are reports that the government plans to raise the income tax exemption limit from ₹3 lakh to ₹5 lakh. If implemented, this change could mean that individuals with an annual income of up to ₹8.5 lakh might pay no income tax, considering the standard deduction and the rebate under section 87A.
Revised Tax Slabs
Changes to income tax slabs are also anticipated. Under the new regime, the exemption limit might be ₹5 lakh, with the following proposed rates:
– ₹5 lakh to ₹6 lakh: 5%
– ₹6 lakh to ₹9 lakh: 10%
– ₹9 lakh to ₹12 lakh: 15%
– ₹12 lakh to ₹15 lakh: 20%
– Above ₹15 lakh: 30%
House Rent Allowance (HRA)
To address rising rental costs, there are calls for increased HRA exemptions. This adjustment would help those living in rented accommodations by lowering their taxable income.
Medical Insurance Premium Deduction
With healthcare costs climbing, there’s an expectation for higher deduction limits for medical insurance premiums. The current limits of ₹25,000 for individuals and ₹50,000 for senior citizens might be raised to ₹50,000 and ₹75,000 respectively, extending these benefits to the new tax regime to promote equal healthcare access.
National Pension System (NPS) Adjustments
Experts are also urging changes to the NPS, including raising the additional income tax deduction limit and increasing the tax-free withdrawal limit upon maturity, aligning it with other retirement savings schemes like EPF.
Disclaimer: The views and recommendations made above are those of individual analysts and not of Business Upturn itself.
