Top 10 Income Tax Expectations From Budget 2024: New Tax Slabs, Standard Deduction Increase, Section 80C Changes - Complete Overview
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Will Finance Minister Nirmala Sitharaman deliver significant income tax relief to the middle class and salaried taxpayers in Budget 2024 ? From revising tax slabs and rates under the new income tax regime to increasing the standard deduction limit and adjusting Section 80C limits, the common man has high hopes for the Union Budget 2024 on July 23rd. This being the first full budget of the Modi 3.0 government, experts anticipate major changes to provide substantial relief to taxpayers. Here, we explore the top 10 income tax expectations for middle-class and salaried individuals from Budget 2024.
1. Revamp of New Income Tax Regime
Tax experts suggest further rationalising the new income tax regime to encourage its adoption. The 30% tax rate, currently applicable on incomes above Rs 15 lakh, might be shifted to incomes over Rs 20 or Rs 25 lakh.
2. Increase in Basic Exemption Limit
There’s a strong call for raising the basic exemption limit from Rs 3 lakh to Rs 5 lakh under the new tax regime. Additionally, some experts recommend increasing the rebate limit for taxpayers from Rs 7 lakh to Rs 8 lakh.
3. Higher Standard Deduction
The standard deduction limit, which stands at Rs 50,000, is expected to be increased to Rs 1 lakh. This adjustment would address the unchanged limit since 2019-20 and offer more relief to taxpayers.
4. Enhanced Section 80C Benefits
Taxpayers are hopeful for the inclusion of Section 80C exemptions under the new regime. Since the current limit of Rs 1.5 lakh has remained unchanged since 2014, raising it to Rs 3 lakh could incentivize savings.
5. Increased Housing Loan Deductions
A push for higher deductions on housing loan interest for self-occupied properties is evident, with expectations to raise the limit from Rs 2 lakh to Rs 3 lakh.
6. Raised Section 80TTA Limit for Bank Interest
Experts believe that the current exemption limit of Rs 10,000 on bank interest is inadequate. They propose an increase and suggest including term and fixed deposits under this limit.
7. Expanded Section 80D Insurance Limit
Salaried individuals are advocating for an increase in the health insurance premium deduction under Section 80D, from Rs 25,000 to Rs 50,000 or even Rs 1 lakh, to better align with current health care costs.
8. Simplified Tax Filing and Grievance Redressal
There’s a call for making the online grievance redressal system for income tax returns more user-friendly. Simplifying the tax filing process further could ease the burden on taxpayers.
9. Rationalization of Capital Gains Tax
Income Tax Budget 2024: Experts highlight the government's awareness of the current complexities in the capital gains tax structure. Presently, there is a lack of consistency in tax rates and holding periods for different instruments within the same asset class. Additionally, the indexation benefits vary across different scenarios. There are indications that the government might simplify the capital gains tax regime, potentially revising tax rates and computation methods to make it more straightforward.
10. Reduced TCS for LRS Transactions
In Budget 2023, the TCS rate was increased from 5% to 20% for certain transactions to curb the outflow of foreign exchange. However, this steep hike has significantly impacted many individuals, including employees. The 20% TCS on amounts sent abroad exceeding Rs 7 lakh has created substantial cash flow issues. Experts advocate reducing the TCS rate from 20% to 10%.
As Budget 2024 unfolds, these expectations highlight the key areas where taxpayers seek relief and reform. The middle class and salaried individuals are hopeful for a budget that addresses these pressing concerns and provides substantial tax relief.
1. Revamp of New Income Tax Regime
Tax experts suggest further rationalising the new income tax regime to encourage its adoption. The 30% tax rate, currently applicable on incomes above Rs 15 lakh, might be shifted to incomes over Rs 20 or Rs 25 lakh.
2. Increase in Basic Exemption Limit
There’s a strong call for raising the basic exemption limit from Rs 3 lakh to Rs 5 lakh under the new tax regime. Additionally, some experts recommend increasing the rebate limit for taxpayers from Rs 7 lakh to Rs 8 lakh.
3. Higher Standard Deduction
The standard deduction limit, which stands at Rs 50,000, is expected to be increased to Rs 1 lakh. This adjustment would address the unchanged limit since 2019-20 and offer more relief to taxpayers.
4. Enhanced Section 80C Benefits
Taxpayers are hopeful for the inclusion of Section 80C exemptions under the new regime. Since the current limit of Rs 1.5 lakh has remained unchanged since 2014, raising it to Rs 3 lakh could incentivize savings.
5. Increased Housing Loan Deductions
A push for higher deductions on housing loan interest for self-occupied properties is evident, with expectations to raise the limit from Rs 2 lakh to Rs 3 lakh.
6. Raised Section 80TTA Limit for Bank Interest
Experts believe that the current exemption limit of Rs 10,000 on bank interest is inadequate. They propose an increase and suggest including term and fixed deposits under this limit.
7. Expanded Section 80D Insurance Limit
Salaried individuals are advocating for an increase in the health insurance premium deduction under Section 80D, from Rs 25,000 to Rs 50,000 or even Rs 1 lakh, to better align with current health care costs.
8. Simplified Tax Filing and Grievance Redressal
There’s a call for making the online grievance redressal system for income tax returns more user-friendly. Simplifying the tax filing process further could ease the burden on taxpayers.
9. Rationalization of Capital Gains Tax
Income Tax Budget 2024: Experts highlight the government's awareness of the current complexities in the capital gains tax structure. Presently, there is a lack of consistency in tax rates and holding periods for different instruments within the same asset class. Additionally, the indexation benefits vary across different scenarios. There are indications that the government might simplify the capital gains tax regime, potentially revising tax rates and computation methods to make it more straightforward.
10. Reduced TCS for LRS Transactions
In Budget 2023, the TCS rate was increased from 5% to 20% for certain transactions to curb the outflow of foreign exchange. However, this steep hike has significantly impacted many individuals, including employees. The 20% TCS on amounts sent abroad exceeding Rs 7 lakh has created substantial cash flow issues. Experts advocate reducing the TCS rate from 20% to 10%.
As Budget 2024 unfolds, these expectations highlight the key areas where taxpayers seek relief and reform. The middle class and salaried individuals are hopeful for a budget that addresses these pressing concerns and provides substantial tax relief.
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