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Published: January 8, 2024
Updated: January 8, 2024

Expectations from Pre-Election Budget : Interim Budget 2024 and Tax Reforms Anticipation

As the Interim Budget 2024 approaches, speculations swirl around possible adjustments to income tax slabs. Finance Minister Nirmala Sitharaman, set to present her sixth consecutive budget for the NDA government, faces the challenge of balancing economic considerations and political constraints.

1. Setting the Stage: Last Budget's Tax Regulations:

In the previous budget, the Centre introduced a slew of new regulations for income tax, including the establishment of the New Income Tax Regime as the default tax system. This set the tone for evolving fiscal policies.

2. Political Landscape and Budget Constraints:

With Lok Sabha elections looming in April-May, FM Sitharaman has signaled minimal major announcements in this budget due to the Election Commission's Code of Conduct, restricting substantial schemes in an election year.

3. Expert Expectations Amid Political Caution:

Despite the anticipated political restraint, experts weigh in on potential tweaks that could benefit taxpayers. Their expectations encompass a range of tax clauses and exemptions.

4. Healthcare Focus:

80D Deduction Limit

Experts advocate for an increase in the deduction limit under Section 80D for medical insurance premiums. Proposing adjustments from Rs 25,000 to Rs 50,000 for individuals and Rs 50,000 to Rs 75,000 for senior citizens, experts emphasize the need to address rising healthcare expenses.

5. Addressing Inflation: Basic Exemption Limit

Chartered Accountants suggest raising the basic exemption limit in both old and new tax regimes to counter high inflation. Their proposal aims to alleviate tax liability across income slabs.

6. Income Tax Rebate Expansion:

Experts call for an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. This move, they argues, would enhance take-home salaries, particularly benefiting the salaried class with limited tax-saving options.

7. TDS Clarity for Home Buyers:

In the realm of property purchases, experts seek clarity on TDS compliance, especially concerning Non-Resident Indian (NRI) sellers. The current system poses challenges for NRIs, and the Interim Budget is seen as an opportunity to streamline processes.

8. Simplifying Capital Gains Taxation:

Gupta further highlights the complexity of the current capital gains tax regime, urging the government to streamline classifications, unify tax treatment for listed and unlisted securities, and simplify indexation provisions.

9. Home Loan Relief in the New Tax Regime

Experts emphasise the need for home loan relief in the New Tax Regime. The hurdle of home loan interest deduction becomes a crucial factor for individuals contemplating a switch to the new system.

Balancing Act for Economic Prosperity:

As we approach the Interim Budget 2024, the expectations and suggestions of experts weave a narrative of a delicate balancing act. While political constraints may limit grand announcements, the potential adjustments in tax structures could pave the way for a more taxpayer-friendly fiscal landscape.