Union Budget 2023-24 Expectations of the Common Man: As the Union Budget 2023 is all set to be presented by finance minister Nirmala Sitharaman on February 1, the common man is expecting the government to provide more incentives to support the growth of the economy, such as tax cuts and financial aid to businesses, investment in infrastructure, and reforms to make taxation simpler and more efficient. Taxpayers expect the government to focus on providing better and more equitable access to services, reducing poverty and unemployment, and encouraging investments in the latest technologies and innovation.
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Here are the key expectations of a common man from the Union Budget 2023.
What Do Taxpayers Want?
Taxpayers expect the government to introduce lower income tax rates and reduce the burden owing to inflation and rising interest rates. They also expect the government to provide incentives to spur equity investments, such as tax exemptions, resulting in higher disposable income at their disposal. Furthermore, introducing simplified tax structure and enhanced tax exemptions are what taxpayers want from the budget.
Section 80C deduction limit was last revised in 2014 to Rs 1.5 lakh. It is an important tax benefit deduction used by taxpayers under the old tax regime. Considering the cost inflation, an increase in the deduction limit to Rs 2 lakh from Rs 1.5 lakh will provide much-needed relief.
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Adhil Shetty, Chief Executive Officer (CEO) and Co-founder of Bankbazaar.com, and Co-Chair of the FICCI Fintech Committee, says, “Taxpayers, like every year, have high hopes that the Union Budget will bring some respite from the high cost of living and inflation. It will likely focus on reforms to put the Indian economy back on the growth trajectory and announce some tax relief for taxpayers. The expectations are many, but the government also has a responsibility to balance its books. That said, one hopes there will be enhancements in the 80C limit. I hope it goes to Rs 2 lakh. If this is done, the taxpayers will benefit from lower tax outgo. People will have more disposable income which would allow them to spend or save more.”
Enhance Old Regime Tax Slabs
The government must enhance the old regime tax slabs which are now one-decade old. The slabs have not kept pace with the inflation. The 20% and 30% slabs were last updated in 2013 when they moved to Rs 5 lakh and Rs 10 lakh, respectively. Adjusted basis CII values for 2013 and 2022, these slabs should be up 50%. The 20% slab should be Rs 7.5 lakh, and the 30% slab Rs 15 lakh. “Without inflation adjustment, old regime taxpayers are paying excess taxes. At an income of Rs 10 lakh, the excess tax per month is Rs 2333. At Rs 15 lakh, it’s Rs 6776 per month,” explains Shetty.
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Single Deduction for Home Buyers
Homeowners with home loans must be given some relief as the cost of real estate has increased significantly across major Indian cities. Last year was quite challenging. Home loan interest rates increased by 225 bps after five successive repo rate hikes to control inflation. After policy measures from the government and the RBI, inflation will likely ease this year. Under Section 24 of the Income Tax Act, home buyers can claim a deduction of up to Rs 2 lakh on the annual interest paid on their housing loan EMI. A deduction of up to Rs 1.5 lakh can also be claimed for the principal amount paid under section 80C.
“It would also be ideal to club all home loan deductions under a single section and remove it from the 80C which has become a smorgasbord of various deductions. Home loans have become expensive after the RBI raised the repo rate by 225 basis points from May 2022 to Dec 2022 to control inflation. A single deduction up to Rs 5 lakh (the sum of 80C, 24B and 80EEA deductions) without sub-limits for principal and interest would help homeowners better tackle the costs of real estate,” Adhil says.
Lower GST on Health Insurance
Insurance penetration is still low in India. The GST rate on health insurance is currently at a relatively high 18%. The government must reconsider this GST rate and reduce it to a lower rate to make it more affordable.
Inclusion of Additional Documents in DigiLocker
It will increase user convenience and help in the quick, secure, and transparent digital issuance of credit. These documents include EPFO passbook, ePAN, and Form 26 AS. These additional documents can act as digital proof of verification carried out by banks and lending institutions. Inclusion in DigiLocker would enable users to digitally access and submit their documents for quick approval of loan applications. For customers, they would have convenient, anytime access to their documents.
In conclusion, tax incentives can boost the confidence of new borrowers, and extended incentives will help fence-sitting borrowers make their buying decision. Existing borrowers need relief to ease the burden of ballooning interest on their home loans. More tax benefits mean more money in the hands of taxpayers.