The Union Budget 2023-24 is going to be presented on Wednesday, February 1, and people are waiting to get to know the announcements on the income tax rates and slabs. Currently, analysts are expecting an increase in the income tax exemption limit, apart from higher deduction limits.
More Tax Exemption or Rebate
Last year, the government did not announce any new provision in the Budget 2022-23. Now, in the Budget 2023, there is an expectation that the government might give relief to individual taxpayers by raising tax exemption or rebate limit. Salaried employees are one of the major tax contributors in India. Their salary is tax-exempt up to Rs 2.5 lakh a year. Income tax is levied on taxpayers on the basis of a slab system.
Also, If the total salary is below Rs 5 lakh in a year, it is also tax-free. However, it is a rebate under Section 87A, not an exemption. If the salary goes above Rs 5 lakh in a year, the tax on the whole amount except the exemption limit of Rs 2.5 lakh will be applicable. Now, there are demands for raising the exemption limit to Rs 5 lakh.
Increased Tax Deduction Limit
In the Budget 2022-23, there are demands of raising the deductions limit under Section 80C, compared with Rs 1.5 lakh currently. Income tax deductions are related to specific deductions that a taxpayer is eligible for on account of investments made (Section 80C) or sum expended (Section 80D or Section 80E).
The real estate sector is also urging the government to provide a separate deduction for realty purchases, apart from Section 80C. The current 80C limit was fixed about a decade ago.
More Home Loan Tax Incentives
There are also expectations around an increase in tax exemptions on home loan principal and interest payments.
“The maximum tax deduction that can be claimed on a home loan interest payment is Rs 2 lakh per FY on a self-occupied property. However, property prices across the country have risen in the past five years. The country has also seen inflation of 6-7 per cent over the years. Noticing the present price bands of houses, the tax saving cap of Rs 2 lakh on housing loans as per section 24(b) needs to be increased. The limit needs to be hiked to at least Rs 3 lakh, regardless of the property’s price," Abhishek Soni, CEO and co-founder of Tax2win, has said.
LTCG Tax Relief
There also also expectations that the government should provide long-term capital gains (LTCG) tax relief to retail mutual fund and stock investors in the market through Budget 2023.
“It will be beneficial to remove LTCG on equities, which is currently at 10% if the capital gain is more than Rs 1 lakh in a financial year. It would also be ideal to introduce tax exemption on STCG up to Rs 1 lakh," Maheshwari said.
Tax Incentives On Insurance
In the Budget 2023, industry players are also expecting to extend tax incentives on insurance. Industry players said that the Union Budget is an opportunity to introduce new reforms for the betterment of the citizens and the nation at large. As the life insurance sector, our paramount interest has always been to insure more citizens and ensure they have the apt coverage.
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