Budget 2024: As the anticipation builds for the upcoming Interim Budget 2024, there’s a buzz surrounding potential good news, particularly in the realm of income tax exemptions and the National Pension Scheme (NPS). Salaried individuals and financial enthusiasts are eagerly eyeing the wishlist, hopeful for positive announcements that could impact income tax benefits and the NPS landscape. Let’s delve into the key expectations and desires as the budget announcement date approaches.
Expectations for Tax Reforms
Among the foremost demands is the simplification of income tax rules, especially in the new tax regime, which many find complex. A common plea is for an increase in the rebate limit under the new tax regime, with hopes for it to rise from the current Rs. 7 lakh to Rs. 7.5 lakh or even Rs. 8 lakh. Such a change would make taxable income up to the specified limit tax-free for individuals opting for the new regime.
Salary Increases Amid Tax Challenges
Despite the global economic slowdown, Indian companies are planning significant salary increases for employees in 2024. Projections indicate an approximate 9.8% salary bump, building on the notable 10% increase observed in 2023. However, the optimism is tempered by the challenge posed by high-income tax policies in India, ranging from 5% to 37%, and additional charges.
Global Talent Attraction and Tax Efficiency
In the context of global competition for top-tier talent, the need for India to consider tax reforms becomes evident. A comparison of India’s tax policies, ranging from 5% to 37%, with more favorable structures in countries like Hong Kong (15%), Sri Lanka (18%), and Singapore (22%), emphasizes the essentiality of reforms to retain senior talent.
Nurturing Top-tier Talent for Global Competitiveness
As India strives to position itself as a global powerhouse, the demand for policies to alleviate the tax burden on salaried employees, especially senior leaders, becomes crucial. Emphasizing the need for a strategic approach that goes beyond mere attraction, the focus is on nurturing and retaining top-tier talent to strengthen the nation’s competitive edge on the global stage.
Potential Policy Shifts in Pension and Insurance
- Raising Minimum Pension under APY: There may be consideration to raise the pension floor for unorganised sector workers under the Atal Pension Yojana (APY) to attract more potential subscribers.
- Tax-free Annuity Income from NPS: Senior citizens may benefit from tax-free status for annuity income from the National Pension Scheme (NPS), considering rising medical expenses and financial well-being during retirement.
- Separate Tax Deduction for Life Insurance Premiums: Proposals suggest a separate tax deduction for life insurance premiums, separate from Section 80C, aiming to boost insurance product penetration and encourage investment in life insurance. Additionally, a potential reconsideration of the 18% GST on health insurance policies may be on the cards.
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