Interim Budget 2024: Tax reforms, deduction revisions & more - common man's wishlist for FM Sitharaman
Salaried individuals are anticipating dedicated deductions for home loan repayments, improvements in Section 80C and 80D deductions, and initiatives to incentivize the transition to the new tax regime for home loan borrowers.
FollowAs the Interim Budget 2024 approaches, individual taxpayers express their hopes for Finance Minister Nirmala Sitharaman to address specific concerns. Among their wishes are an increase in the deduction limit under Section 80C, aiming to make the accumulated balance in the National Pension Scheme (NPS) tax-free upon withdrawal.
Salaried individuals are anticipating dedicated deductions for home loan repayments, improvements in Section 80C and 80D deductions, and initiatives to incentivize the transition to the new tax regime for home loan borrowers.
Here are the expectations of the common man from the Finance Minister in the Union Budget on February 1:
1. Revision in Section 80C Deduction Limit
Taxpayers are urging an increase in the deduction limit under Section 80C. Currently capped at Rs 1.50 lakh per year, individuals suggest a minimum raise to Rs 2.50 lakh, emphasizing that the present limit has seen minimal adjustments over the past 18 years.
2. Changes in Tax Slab
Taxpayers advocate for revising the existing tax slabs, which have remained unchanged since 2014. Indexing tax slab limits to inflation is proposed to mitigate the increasing real tax burden on households, providing relief to the middle class. The revised tax slabs presented in Budget 2023 for the new income tax regime included tax-free income up to Rs 3 lakh, with subsequent slabs ranging from 5% to 30%. Taxpayers hope for further adjustments in alignment with inflation.
3. Tax Provisions on NPS Withdrawals
Concerns are raised about the tax treatment of National Pension Scheme (NPS) withdrawals. Currently, only 60% of NPS withdrawals are exempted from tax, and the remaining amount used to purchase an annuity becomes taxable when received. Taxpayers seek parity with Employee Provident Fund (EPF) withdrawals, which are entirely tax-free at retirement. Suggestions include eliminating the mandatory annuity purchase with 40% of the corpus, allowing subscribers to decide where to invest the money.
4. Separate Deduction for Principal Repayment
Taxpayers call for a separate deduction for the repayment of home loans under Section 80C. With the existing overcrowding of Section 80C, 80CCC, and 80CCD(1), a dedicated provision for home loan repayments is proposed to ease the burden and encourage larger home loans. Reference is made to Section 80EEA, which introduced a separate deduction in 2019 for interest on home loans for first-time homebuyers.
Also read: Interim Budget 2024 Expectations: Pharma and Healthcare sectors seek bold policy moves
Despite these taxpayer expectations, Finance Minister Nirmala Sitharaman has downplayed anticipations of significant announcements in the Interim Budget, describing it as a vote-on-account due to the upcoming elections. The actual outcome will be revealed on February 1, 2024.
