Taxpayers hope for increase in exemption limit, standard deduction, and housing loan benefits in Budget 2024.
Budget 2024: Finance Minister Nirmala Sitharaman introduced a new tax regime in the Union Budget 2020-21. However, it comes with certain conditions. The government is trying to make the new tax regime attractive for income taxpayers. From 1 April, 2023, the new income tax regime has been made the default tax regime. However, the citizens have the option to avail the benefits of the old tax regime.
In the Budget 2023 last year the finance minister reduced the surcharge for the higher income bracket and also permitted a standard deduction. “It is estimated that because of these measures at least 40% of taxpayers are likely to opt for the new tax regime,” said Aarti Raote, Partner, Deloitte India.
1) Increase in the basic exemption limit
The current govt will be presenting its interim budget ahead of its forthcoming general elections. Taxpayers expect big measures with this budget considering the new tax regime.
“With budget 2024, salaried individuals are hoping for an increase in the basic exemption limit under both the new and old tax regimes and they are also viewing an increase in the limit of standard deduction under both the tax regimes. They are also expecting HRA exemption, and health insurance premium deduction under the new regime too,” said Abhishek Soni, CEO and Co-founder of Tax2win.
2) NPS
“We suggest increasing the limit of NPS to ₹1,00,000/- for both tax regimes,” said Kurian Jose, CEO, Tata Pension Management
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3) Deduction for interest on housing loans
According to Abhishek Soni, salaried individuals who are home loan borrowers are reluctant to move from the old to the new tax regime to not lose the home loan interest deduction allowed under the old regime. They are expecting some measures to be taken in this regard to encourage people to shift to the new tax regime.
To make it further attractive the finance minister could consider extending the deduction for interest on housing loans for the new tax regime. Most middle-income taxpayers have a housing loan and would find the new tax regime attractive if this benefit is provided, said Aarti Raote
Finance Minister Nirmala Sitharaman while presenting Budget 2023 on 1 February 2023, tweaked the slab rates for individuals opting for the new income tax regime.
-No tax would be levied for income up to ₹3 lakh
-Income between ₹3-6 lakh would be taxed at 5 per cent
-Income between ₹6-9 lakh would be taxed at 10 per cent
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-Income between ₹9-12 lakh at 15 per cent
-Income between ₹12-15 lakh at 20 per cent
-Income of ₹15 lakh and above will be taxed at 30 per cent.
