As the nation anticipates the upcoming Lok Sabha elections in May, Union Finance Minister Nirmala Sitharaman is poised to unveil an interim budget on February 1, 2024. While she has indicated that major announcements may not be on the horizon for this interim budget, the economic landscape remains optimistic for India amidst global uncertainties.
With the onus on bolstering domestic demand to fuel growth, particularly through private consumption and investment spending, the interim budget is expected to be more than just a subdued fiscal exercise. Key areas of focus may include enhancing the appeal of the new tax regime, simplifying tax structures, ensuring robust tax collection, and expeditious resolution of litigations.
Here are some top expectations from individual taxpayers for Budget 2024:
Last year's budget aimed to make the new tax regime attractive, with the new regime becoming the default option. However, the surcharge rates for the income group of Rs 50 lakh to Rs 5 crore remained unchanged. The expectation is a reduction in surcharge rates as follows:
Taxable Income | Current Surcharge | Expected Surcharge |
---|---|---|
INR 50 Lakhs to INR 1 Crore | 10% | 5% |
INR 1 Crore to INR 2 Crore | 15% | 10% |
INR 2 Crore to INR 5 Crore | 25% | 15% |
Exceeding INR 5 Crore | 25% | 25% |
Considering the rising cost of living and the absence of expense deductions under the new regime, an increase in the standard deduction from Rs 50,000 is expected.
Taxpayers in Tier 1 and Tier 2 cities, defined as Metros based on various criteria, may expect an increase in the House Rent Allowance (HRA) exemption percentage from 40% to 50%.
To alleviate the financial burden on salaried employees, there is an anticipation of an increase in the limit for deducting home loan interest from the current Rs 2 lakh to Rs 3,00,000.
In response to the surge in health insurance costs post-COVID-19, taxpayers hope for an increase in the exemption limits for mediclaim insurance premiums from Rs 25,000/50,000 to Rs 50,000/1,00,000.
To promote the adoption of electric vehicles, an extension of the timeline for maximum deduction on loans sanctioned for EV purchases beyond March 31, 2023, is anticipated.
Introducing an authentication process with foreign mobile numbers for non-residents could streamline the e-verification of tax returns, minimizing paperwork and administrative complexities.
A long-awaited relief is expected for individuals claiming foreign tax credit, aligning the deadline for revised returns with the finalization of tax returns in countries with different tax year timelines.
Clarity is sought regarding the unintended double taxation of employer annual contributions exceeding INR 7.5 lakh to Provident Fund, Superannuation, and National Pension System.
There is a call for aligning the exemption limit for employer contributions to NPS with PF contributions at a minimum of 12%, promoting increased investment in NPS for enhanced post-retirement financial security.
As the nation eagerly awaits the unveiling of the interim budget, these expectations reflect the hopes and aspirations of individual taxpayers for a more favorable and simplified tax regime
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