The upcoming Union Budget 2023-24 is expected to bring in some changes to the current tax slabs, providing more incentives and exemptions to taxpayers. One of the major changes that taxpayers are looking forward to is the revamping of the tax slabs.
Currently, taxpayers have the option to file taxes under two different regimes, which can be confusing. In both the old and new tax regimes, income up to Rs 2.5 lakh is exempt from tax, and there is an additional exemption of Rs 12,500 provided under Section 87A of the Income Tax Act for income up to Rs 5 lakh. Taxpayers are hoping that the basic tax exemption limit will be raised from Rs 2.5 lakh to at least Rs 5 lakh or more in the Union budget.
Another expectation from the upcoming budget is the increase in the minimum tax exemption limit for home buyers. “Employed taxpayers are hoping for additional incentives from the government to increase affordable housing options. Currently, homebuyers can claim deductions on the annual interest paid on their housing loans and the principal amount paid. However, in the upcoming Union budget, home buyers are anticipating an increase in the limit of these deductions to make home ownership more attainable. Furthermore, they are hoping for a cap on the exemptions and incentives provided to them,” says Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital Ltd.
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Another area of concern is the exemption on personal loans. As the lending market in India continues to grow, personal loans and education loans make up a significant portion of it. Currently, there are incentives and exemptions provided for education loans under Section 80E of the Income Tax Act. However, personal loan borrowers do not have access to the same benefits. As we look ahead to the upcoming Union Budget 2023-24, there is hope that the government will provide some form of relief for personal loan borrowers as well.
Finally, there is a need for a uniform capital gain taxation structure. “As Indian taxpayers have a variety of investment options available to them, each asset class comes with its own unique capital gain structure. This can make it challenging for taxpayers to understand their tax liability on capital gains. As we look ahead to the upcoming Union Budget 2023-24, there is hope for a more uniform tax structure for capital gains to be put in place, to make it easier for taxpayers to understand and calculate their tax liabilities,” says Bajaj.
Thus, as we look forward to the Budget 2023-24, Indian taxpayers are optimistic that the government will provide more incentives and exemptions. This will help them have more disposable income, which can be invested and saved, ultimately contributing to building wealth for taxpayers.