The government is set to announce its interim Budget before the upcoming general elections. Taxpayers anticipate significant changes in this Budget. Salaried individuals are looking forward to higher basic exemption limits and increased Housing Rent Allowance (HRA) exemptions in both the new and old tax systems.
They are also expecting health insurance premium deductions under the new regime. Enhancements are expected in section 80C and 80D deductions.
Abhishek Soni, CEO, Tax2Win, an income tax portal, said, “Salaried individuals who are home loan borrowers are reluctant to move from the old to the new tax regime to not lose the home loan interest deduction allowed under the old regime. They are expecting some measures to be taken in this regard to encourage people to shift to the new tax regime.”
According to experts, it is most likely that this budget would prioritize fiscal discipline and avoid populist measures. However, there is optimism for potential relief in the realm of personal income tax, particularly in the new tax regime.
Suneel Dasari, founder and CEO, EZTax.in, said, “Budget 2024 and income tax reforms in India should prioritize expanding the tax base and simplifying tax compliance. It is also expected to announce the sunset of the previous tax regime and the complete implementation of the new tax regime, which will facilitate tax compliance. Increase the income tax rebate under the new tax regime to Rs 30,000 to make the taxable income tax free up to Rs 7.5 lakh (which is currently set in Budget 2023 to Rs 7 lakh).”
“Like the new tax regimes, the basic exemption limit for filing income tax returns under the old tax regime could be raised to Rs 3 lakh. Only bank-deposited (or digital) house rents should be allowed to be considered for HRA (under the old tax regime). Increase standard income tax deduction for a self-occupied home loan to Rs 3 lakh to promote housing and savings,” Dasari added.
Here Are Some of The Top Expectations From The Experts
Income Tax:
80D Deduction Limit: “The deduction limit under Section 80D for medical insurance premiums should be increased from Rs 25,000 to Rs 50,000 for individuals and Rs 50,000 to Rs 75,000 for senior citizens, reflecting rising healthcare costs.
Additionally, extending Section 80D benefits to the new tax regime would promote equitable access to healthcare,” Avinash Polepally, senior director, ClearTax, said.
Ease TDS Compliance For Home Buyers:
At present, one per cent of tax deducted at source (TDS) is deducted on property purchases exceeding Rs 50 lakh.
While this process is straightforward for resident sellers (using Form 26QB), it becomes more complex for Non-Resident Indian (NRI) sellers.
Simplification Of Capital Gains Taxation:
The complexity of the current capital gains tax regime poses challenges for investors, with numerous factors to consider, such as asset classes, holding periods, tax rates, and residency status.
The government should streamline the classification of equity and debt instruments, unify tax treatment for listed and unlisted securities, and simplify indexation provisions.
Bengaluru To Be Considered A Metro City For The Purpose Of HRA Exemption:
“Despite being recognized as a metro city, Bengaluru remains classified as a non-metro for income tax purposes, limiting HRA deductions to 40 per cent for its residents instead of 50 per cent available in other metro cities,” Polepally said.
