Budget 2023 Income Tax: Tax payers, especially individuals / employed people, are expected to get some happiness in Budget 2023 on the income tax front. Because Finance Minister Nirmala Sitharaman is going to present her last full budget on February 1, due to which many expectations of the people from job profession to children's education are attached. 2024 is the year of general elections (Lok Sabha Election 2024), in such a situation the expectations of this class from the upcoming Union Budget ( Union Budget 2023 ) have increased slightly. In this budget, it is likely that the government will be keen to present a budget that will boost the country's economic growth as well as meet the expectations of taxpayers, especially at a time when all countries are recovering from a global pandemic. are.
Actually, in the last budget, some changes were made for the salaried class by the Modi government in terms of introducing a new income tax regime and increasing the standard deduction. Despite this, the salaried income tax payers could not get the benefit of exemption. In such a situation, it is natural for their hopes to rise from the last budget of the Modi government-2.0 coming before the general elections.
These are the 6 important expectations from Budget 2023
1. The first wish of the common man including the employed is that the government should increase the annual basic exemption limit of income tax from the existing Rs 2.5 lakh to Rs 5 lakh under both old and new tax regime in the upcoming budget. There has been no change in the existing income tax annual exemption limit of Rs 2.5 lakh under both the old and new tax regime for individual taxpayers below the age of 60 years from FY 2014-15. The Modi government may revisit this cap considering several factors like rise in prices of essentials of living, inflation, number of taxpayers filing tax returns, tax revenue foregone by the government, etc. Is.
2. From the financial year 2014-15, the deduction limit under Section 80C of the Income Tax Act 1961 has been capped at Rs 1.5 lakh. Most of the deductions under Section 80C encourage taxpayers to invest in long-term savings such as Public Provident Fund (PPF), National Pension System (NPS) and fixed deposits, which provide long-term funding for infrastructure projects in the country. becomes the source of Apart from this, the taxpayer also spends a significant amount on home loan repayment, insurance cover for self and dependents and children's education. In such a situation, it is a popular desire that the deduction limit may be increased from Rs.1.5 lakh to Rs.3 lakh.
3. Tax-free medical reimbursement and traveling allowance exemption was withdrawn from the financial year 2018-19 by introducing the standard deduction scheme. It is a different matter that since then the amount of deduction has remained constant, but the cost of medical expenses and fuel have increased significantly. Thus, the government can show a generous heart by increasing the standard deduction in this head from the existing limit of Rs. 50,000 to Rs. 1 lakh. Apart from this, it can also be assessed to provide the benefit of standard deduction to taxpayers who opt for taxation under the new alternative tax regime, as these expenses are necessary for any salaried taxpayer.
4. At present, the deduction limit for health insurance premium, which includes preventive check-up for self, spouse and dependent children, is Rs.25,000. Apart from this, there is a limit of Rs 50,000 for parents, at least one of whom must be a senior citizen. Considering that the cost of hospitalization and medical expenses have increased significantly over the years, these limits may be increased to Rs.50,000 and Rs.1 lakh respectively.
5. Under Child Education Allowance, at present only exemption of Rs 100 and Rs 300 per child per month is available for education and hostel expenses of maximum two children respectively. These exemption limits were fixed about two decades ago, so considering the increase in the cost of education in recent times, these exemption limits can be increased to a minimum of Rs 1,000 and Rs 3,000 per month per child respectively.
6. The deduction for interest on home loan is currently Rs 2 lakh. With interest rates rising and the deduction available for housing interest being capped at Rs 2 lakh, home loan borrowers are facing a challenge in terms of non-tax deductible interest. Keeping this in mind, this deduction can be increased from the existing limit of Rs 2 lakh to Rs 5 lakh. Also, under the new tax regime, interest exemption on home loan on self-occupied property is not allowed. Given that buying a house is a long-term financial deal, it can be assessed that this deduction can be extended to the salaried class under the new tax regime.
Explain that on one hand all the above proposals may be attractive from the point of view of common man or salaried tax payers, on the other hand its impact on direct tax collection will need to be carefully studied and evaluated. Only after this the Modi government can implement it.
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