Budget 2023 expectations of salaried employees: Budget 2023 can play a big role in improving the lives of salaried employees, who are also one of the largest groups of taxpayers in the country. Experts say it is a great opportunity for the Government to announce some long-pending revisions in Income Tax Rules that will contribute to the ease of living for salaried employees.
With just a few weeks left for Union Budget 2023, salaried employees are expecting some big tax relief announcements in view of the rising cost of living. While the details of Budget 2023 will be known only on February 1, we talked to some experts as to how Budget 2023 can help salaried employees. Here are the 5 points they suggested.
HRA Rules Update
Sumit Sabharwal, CEO of TeamLease HRtech says there is a need to revise the definition of Metro cities for the calculation of House Rent Allowance (HRA). Even as the rent and cost of living have gone up in cities like Bengaluru, it is not considered a metro city for HRA deduction.
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“Bengaluru is India’s Silicon Valley and employs almost 1.5 million employees in the IT/IT-enabled sectors. The salaries are constantly rising, and house rents are climbing at the same pace. Still, only Delhi, Kolkata, Chennai and Mumbai are considered metro cities for HRA deduction. The employees in Bengaluru may be made eligible for the same benefits,” says Sabharwal.
Taxation of Joining Bonus
Archit Gupta, Founder and CEO, Clear (formerly Cleartax) says there is a need to revise the rule for taxation of joining bonus received by employees.
“People who leave an organisation after getting a joining bonus, often need to reimburse the amount if they quit before a predetermined time. They get the amount net of income tax. However, if they quit before the agreed time they need to pay the bonus money back in full, in case the quitting FY is different from the joining FY. Some relief may be extended to these people,” says Gupta.
Also Read: How payment for notice period by salaried employees is taxed
Income Tax Slab Revision
Sabharwal says tax slabs also need an update as per the present economic scenario.“Currently, it’s common even for freshers to get jobs with Rs 5-7 LPA packages. Taxes on one side and the rising cost of living on the other side will reduce their disposable income and savings. The situation worsens when employees also have to look after their dependent family members within the same package.”
Experts also say there is a need to revise various deduction limits under sections 80C and 80D.
There has been no change in the 80C deduction for many years now. The present limit of Rs 1.5 lakh was set in Finance Act 2014. So it would be beneficial for common people to increase the limit to Rs 2.5 lakh.
Similarly, there is also a need to increase the limit of Section 80D deduction against medical insurance. Experts say it should be revised from Rs 25,000 to Rs 50,000. “As during the pandemic time, the insurance organisations have increased the premium amount for the same coverage. For elderly people the amount should be extended to Rs 75,000 from the existing Rs 50,000,” says Sabharwal.
Also Read: Even vacant property is taxed as let out. Will Budget 2023 change this for homebuyers?
Home Office Expenses
Work from home is going to stay in future. Even as offices have opened, many people are still working from their homes. Therefore, home office expenses should be allowed as a deduction, experts say.