As we usher into the new year 2023, salaried employees will be eagerly waiting to see what the government may have planned to announce for them in terms of some tax relief in the upcoming Union Budget 2023. On February 1, 2023, Union Finance Minister Nirmala Sitharaman will deliver the Union Budget for the current year to Parliament. Salaried workers in India are the main source of the nation’s tax revenue; as a result, they are the focus of the most anticipated regulatory adjustments from the Union Budget 2023, since any changes to tax rates or exemptions have a considerable influence on their budgeting and finance. LTCG surcharge limit, deduction for dependents with disabilities in an annuity scheme, exemption for Covid-19 related payments, extension of ITR Revision period, introduction of digital money & tax on virtual assets, and surcharge rate cap of 15% for association of persons (AOP), were some of the few developments to the direct tax rates and guidelines for individual taxpayers that were announced in the Union Budget 2022.
Based on an exclusive interview with CA Manish P Hingar, Founder at Fintoo, the spokesperson said “As our Union Finance Minister Nirmala Sitharaman is expected to announce Union Budget for the financial year 2023-24 in the Parliament on 1st February 2023, income taxpayers, especially the salaried class are pinning high hopes on the current government, to introduce some tax-related relief or change in income tax slabs.”
Here are some key expectations for salaried employees from Union Budget 2023, based on a discussion with CA Manish P Hingar.
Revamping tax slabs
Currently, taxpayers have the option to file taxes by opting between two tax regimes which sometimes becomes a confusing task. Take note that under both the old tax regime, your income is exempt from tax up to ₹2.5 lakhs, and you don’t have to pay any taxes up to the income of ₹5 lakhs as you get an exemption of ₹12,500 under section 87A of the Income Tax Act. Taxpayers are anticipating that there is a need to raise the basic tax exemption limit from ₹2.5 lakhs to at least ₹5 lakhs or more.
Increasing minimum tax exemption limit for home buyers
Salaried taxpayers anticipate that the government should provide additional incentives to increase affordable housing. Currently, homebuyers can claim a deduction of up to ₹2 lakh on the annual interest paid on housing loan EMI u/s 24b. Moreover, they can also claim a deduction of up to ₹1.5 lakhs under Section 80C for the principal amount paid on housing loan. In the upcoming union budget home buyers expect the 24b limit to be increased up to ₹5 lakhs along with an increment in the limit of Section 80C up to the extent of ₹3 lakhs.
Exemption on Personal Loans
Personal loans and education loans comprise 35% of the Indian lending market. Although there is an exemption limit on interest on education loans under Section 80E of the Income Tax Act, currently, there is no such incentive or exemption provided to personal loan borrowers. Hence, it is expected that in the upcoming union budget, some relaxations should be provided to personal loan borrowers too.
Uniform Capital Gain Taxation
With different asset classes available to invest in India, every asset class has a different capital gain structure, which often makes it difficult for taxpayers to assess their tax liability on the capital gains incurred. Thus, a need for a uniform tax structure for capital gains is expected to be brought up in the upcoming union budget.
Having said that, the expected incentives and exemptions which may be provided to taxpayers in the upcoming union budget 2023-24 will help Indian taxpayers to have more disposable income in hand, which can be mobilized into more investments and savings and contributing to building wealth for taxpayers.
On questioning regarding what are the pre-budget expectations for salaried employees, Mr Daya Prakash, Founder, TalentOnLease said “In India, salaried employees are the key contributors to the country’s tax revenue. The annual budgetary exercise is among the most anticipated regulatory updates by the salaried class, as any exemptions or modifications in tax rates have a significant impact on their finances and expenses.”
“Budget 2023–24, the last union budget of the Modi government before the 2024 elections, is anticipated to be beneficial to taxpayers with a focus on potential economic benefits. The salaried class anticipates long-term benefits like healthcare, superannuation, maternity post-retirement benefits from the government in the upcoming budget. Salaried employees expect the Budget 2023 to boost housing rent allowance to accommodate the work-from-home culture and higher rentals post-COVID. Due to increasing volatility and to incentivize savings and investments, the section 80C deduction cap (currently Rs. 150,000) is anticipated to increase. The upcoming budget is also expected to include a work-from-home allowance to rationalise and offer tax benefits to the salaried class, as well as a raise in the standard deduction limit, either as a fixed increment or the introduction of a progressive standard deduction based on cumulative remuneration,” said Mr Daya Prakash.
“Taking into account that the Indian economy has begun to recover from the fiscal repercussions of the COVID-19 pandemic outbreak, the current government will concentrate on ensuring that its goal of designing a budget that encourages economic growth aligns with the expectations of taxpayers,” said Mr Daya Prakash.
Source : livemint