Finance Minister Nirmala Sitharaman is just a few weeks away from presenting her seventh budget, her first under 'Modi 3.0', with salaried taxpayers hopeful of tax relief measures.
The government is expected to announce measures favouring the salaried taxpayers in order to increase consumption by the middle class.
advertisementRead Full Budget 2024 CoverageSo what are the tax relief measures expected for the salaried taxpayers?
Income tax thresholdsExperts are in favour of raising the income tax thresholds by the government.
"The Rs 1.5 lakh limit should be increased to Rs 2 lakh or 2.5 lakh at a bare minimum.
Finance Minister Nirmala Sitharaman is just a few weeks away from presenting her seventh budget, her first under 'Modi 3.0', with salaried taxpayers hopeful of tax relief measures.
Various media reports and experts suggest that the government led by Prime Minister Narendra Modi might opt for populist measures which could witness tax relief measures for salaried individuals.
The government is expected to announce measures favouring the salaried taxpayers in order to increase consumption by the middle class. However, the government is also looking to consolidate the fiscal deficit and meet the target for FY24.
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Read Full Budget 2024 Coverage
So what are the tax relief measures expected for the salaried taxpayers?
Income tax thresholds
Experts are in favour of raising the income tax thresholds by the government.
"Specifically, income below Rs.5 lakh should be exempt, income between Rs. 5 lakh to Rs 12 lakh should be taxed at 10%, income between Rs 12 lakh to Rs 20 lakh at 20%, and the highest slab of 30% should apply to income above Rs. 20 lakh," said Ankit Jain, Partner, Ved Jain & Associates.
Section 80C limit
An increase in deduction limit under Section 80C has been voiced time and again, and it would act as a perfect measure in helping taxpayers save more money.
"The Rs 1.5 lakh limit should be increased to Rs 2 lakh or 2.5 lakh at a bare minimum. This would help savings as well as curb inflationary pressure to some extent in the country," said Dipesh Jain, Partner, Economic Laws Practice.
Standard deduction
Currently, a standard deduction of Rs 50,000 is applicable under both the old and new income tax regime and experts believe that the limit should be increased.
"There is an increasing demand to enhance the standard deduction of Rs.50,000 to a higher level since the limit has been untouched since 2019. This will help a lot of taxpayers who are currently feeling very disheartened by the inflation rise and low salary increases," said SR Patnaik, Partner, Cyril Amarchand Mangaldas.
Housing loan deduction
"The interest deduction allowed on housing loans has been capped at Rs 2 lakh since a few years. An increase in this cap to say Rs 3 lakh would be a very welcome move for individuals," said Ritika Nayyar, Partner, Singhania & Co.
She further added that it would be more beneficial if this deduction is provided separately and not clubbed with 80C
"The deduction for housing loan interest should be increased. With the steady rise in housing costs, it is challenging to find even a 1BHK house for less than Rs. 50 lakhs in urban areas. Hence, the current deduction of Rs. 2,00,000 for self-owned houses is insufficient and unfair," said Ankit Jain.
Simplification of capital gains tax
Capital gains are considered the most complex category of income under the Income-tax Act, due to numerous amendments over the years.
There are different timeframes for various assets to be classified as long-term or short-term, and multiple base tax rates such as 10%, 15%, 20%, 22%, 30%, and 40%.
"Additionally, there are varied surcharge rates, qualifications for indexation or currency fluctuation benefits, and eligibility for certain deductions under the section 54 series, among other complexities. Simplifying the capital gains tax system and rationalising the tax rates would be greatly beneficial," said Dipesh Jain.
Published By: Sonu Vivek Published On: Jun 26, 2024
