Citizens across the country eagerly wait for the announcement of the Union Budget every year as it affects them and the growth of this nation. The budget details the expenditure and revenue receipts anticipated for the upcoming fiscal, and hence, holds a great amount of significance for the whole country. The Union Budget 2023-24 is going to be presented by our Finance Minister, Nirmala Sitharaman, on 1 February. Salaried employees in India are expecting income tax relief from the upcoming Budget. As per the Income Tax Department, nearly 50 percent of the income tax returns (ITR) filed in 2022 were by salaried employees.
Here are some of the expectations of salaried employees from Union Budget 2023-24:
Limit of Standard Deduction to be hike to factor inflation
The allowed standard deduction under section (u/s) 16(ia) of the Income Tax (IT) Act is Rs 50,000 per annum (p.a.) to a salaried employee. Experts believe this could be increased to Rs 75,000 p.a. after taking into account the present inflation levels and also the increased cost of living. Alternatively, the one-time annual increase in standard deduction limit can also be linked to the inflation rate rather than the limit by a fixed amount.
Increasing savings-based tax deductions
Deduction u/s 80C of the IT Act, 1961 covers multiple savings/investment-based deductions like Public Provident Fund (PPF), Life Insurance Corporation (LIC), etc. But the overall limit is restricted to Rs 1,50,000 p.a. and was revised last time in the 2014 Budget. Experts hope that the present limit of deduction u/s 80C be increased to Rs 200,000 p.a.
Raising threshold limit of Rs 50,000 for contribution to specified pension schemes
According to Section 80CCD(1B) of the IT Act, salaried professionals can claim deduction up to Rs. 50,000 p.a. over and above the threshold limitation u/s 80C of Rs. 1,50,000 p.a. by contributions made to some specified pension schemes of the Central Government It is expected that the investment limit under section 80CCD(1B) be increased to Rs 100,000 p.a from Rs 50,000. This will encourage the investments in the retirement plans.
Increasing the limit of certain allowances
The provisions under the ‘Salary’ head offer various allowances like Children Education Allowance of Rs 100 per month per child. Such limits are not in line with the present education cost and must be adjusted for inflation. The allowances limits haven’t been raised for more than 20 years. Considering the substantial increases in education cost, it is expected that the threshold limits are going to be rationalized to make it more in tune with today’s era.
5. Tax exemption limit for home buyers
Homebuyers are able to claim a yearly deduction of up to Rs 2 lakh on the interest paid on housing loan equated monthly installment (EMI) under EMI u/s 24b. They can claim a yearly deduction of up to Rs 1.5 lakh u/s 80C for the principal amount paid on the loan. The salaried class is expecting that the 24b limit is hiked to Rs 5 lakh and the Section 80C limit is raised to Rs 3 lakh, as mentioned in a report by Hindustan Times.
6. Tax slabs
Taxpayers are anticipating that the current tax slab with basic exemption limit of Rs 2.5 lakh income could be raised to Rs 5 lakh under the old and new tax regimes. The Rs 2.5 lakh limit has remained unchanged since 2014-15.
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