Budget 2024: With the Modi 3.0 government all set to present the 2024 general budget, palpable anticipation runs among the common man, salaried employees, and the middle class for big-ticket reliefs, especially with regard to reforms in income tax. These groups look up to the new budget for much-needed financial respite and incentives to save and invest, as economic pressure mounts.
Rationalising Income Tax Slabs
The biggest expectation is about the rationalization of income tax slab rates. As things stand, the 30% rate kicks in at incomes above Rs 15 lakh. Experts suggest increasing this threshold to Rs 20 or 25 lakh. It would grant huge relief to most of the middle and upper-middle-class population and may make the new tax regime more attractive and much more palatable.
Benefits of Section 80C- Enhance
Another area pending reform is that under Sec 80C, the exemption limit has remained unchanged at Rs 1.5 lakh since 2014. There is intense pressure to increase it to Rs 3 lakh. This would spur more savings and also help in substantive tax reliefs to the taxpayer for better financial planning and security.
Raise in Standard Deduction and Basic Exemption Limits
There has also been a demand to increase the limit of the standard deduction from the current Rs 50,000 to Rs 1 lakh. It will directly impact the salaried class as this would cut down their taxable income, hence increase disposable income.
The demands made, especially, are that the basic exemption limit be increased from Rs 3 lakh to Rs 5 lakh. It will be a much simpler tax regime because many more persons will come within its folds. Similarly, the exemption of Rs 7 lakh can increase to Rs 8 lakh, keeping in view the trends of inflation and adjustments towards the cost of living. Deductions available on account of health insurance premium and interest on housing loan.
It is the health expenses that cause many sleepless nights to the middle class. Exemption under Section 80D for health insurance premium has been enhanced to Rs 25,000 now. If the said exemption gets enhanced to Rs 50,000 or even to Rs 1 lakh, no doubt it shall provide relief and give incentives to them to invest more in health insurance to get better health security.
Similarly, the deduction limit of interest paid on housing loans for selfoccupied properties should be increased to Rs 3 lakh from the existing Rs 2 lakh. Its inclusion into the new tax regime would further give fillip to the house ownership market and reduce the financial pressure for new home buyers.
Simplification of Capital Gains Tax
The existing capital gains tax is always considered to be far too complex and replete with inconsistencies. Where one got confused were the different tax rates and holding periods for different instruments in the same class and application of indexation benefits that was not uniform. Experts in the industry are of the view that this would be complemented by a rationalized capital gains tax regime, not only in the rate changes, but also in the system of computation. The ease this is likely to bring about in compliance, coupled with the aid it would render in drawing more investors into the financial markets, is not underrated.
The budget day sees every commoner and working professional sitting with bated breath, waiting for the measures which financial stalwarts aim at and can help reduce this financial burden to see a clear path towards economic stability. They pertain to income tax slab reforms, benefits under Sec 80C, standard deductions, health insurance premium, housing loan interest deductions, and capital gains tax. These no doubt can bring many changes into the lives of middle-class people. Now, it is for the Union finance minister to ensure these wishes really do come true and usher much-needed relief for millions across this country.