With Finance Minister Nirmala Sitharaman set to present the Interim Budget 2024-25 on February 1, 2024, anticipated mounts regarding potential tax adjustments and relief measures, despite the constraints of an election year. Let’s delve into the expected tax considerations and reforms that experts foresee in the upcoming budget:
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Adjustment of Deduction Limits:
Experts advocate for increasing the deduction limit under Section 80D for medical insurance premiums to accommodate rising healthcare expenses. Suggestions include raising the limit to Rs 50,000 for individuals and Rs 75,000 for senior citizens.
Extending Section 80D benefits to the new tax regime is also proposed to ensure equitable access to healthcare services.
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Revision of Basic Exemption Limit:
Amidst high inflation, experts recommend raising the basic exemption limit in both old and new tax regimes. A potential increase of Rs 50,000 is suggested to alleviate tax burdens across income slabs.
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Enhancing Tax Rebate Limits:
Building on the Finance Minister’s previous announcement, experts propose further increasing the income tax rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. This adjustment is anticipated to boost take-home salaries for the salaried class.
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Clarity on TDS Compliance for Homebuyers
Experts call for clarity on TDS compliance, particularly for Non-resident Indian (NRI) sellers in property transactions. Simplifying the taxation process for NRIs could streamline property transactions and enhance compliance.
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Simplification of Capital Gains Tax Regime:
Addressing the complexity of the current capital gains tax regime, experts recommend simplifying classification, unifying tax treatment for different securities, and streamlining indexation provisions. These reforms aim to enhance investor clarity and facilitate compliance.
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Home Loan Relief in the New Tax Regime:
Experts highlight the challenge faced by taxpayers servicing home loans under the new tax regime, particularly due to the Rs 2 lakh cap on home loan interest deduction. Addressing this limitation could incentivize more taxpayers to transition to the new tax system.
Amidst the constraints of an interim budget in an election year, these proposed tax considerations reflect the need for targeted reforms to ease taxpayer burdens, promote compliance, and stimulate economic growth. As the Finance Minister unveils the budgetary provisions, stakeholders await eagerly to gauge the government’s stance on these critical tax issues.
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