What does the common man want from BUDGET 2023?
“What Aam Aadmi wants from the upcoming UNION BUDGET 2023?”
“A Budget that does not make us choose between ‘DAL’ and ‘GAS’!!”
It is that time of the year again, when the Indian Taxpayers earnestly wait for the Indian Finance Ministry to wave their magic wands and give relief to the “Aam Janta”.
Finance Minister of India, Nirmala Sitharaman will present the Union Budget 2023-24 on February 1, 2023, at 11.00 a.m.
Indian Taxpayers typically anticipate that a Union Budget will try to focus on the tax slabs, increased expenditure on Infrastructure, tax deductions, social welfare, job opportunities, and overall economic growth.
With 2024 being the year of the Lok Sabha Elections, expectations are too high that the Finance Minister, Nirmala Sitharaman, will give relief to the taxpayers in terms of revision of tax slabs. Let’s have a quick look at the expectations of the common man from its government this coming budget –
Income Tax Threshold Limit:
While an increase in the tax threshold limit means revenue loss to the government, the taxpayers are still rooting for such revision from the existing Rs. 2.5 lakhs to Rs. 5 lakhs.
This benefit shall thereby provide relief to the salaried employees, middle and lower-middle class. The revised threshold, if introduced, will reduce the gap with the threshold limit prescribed in EWS (economically weaker section) scheme. Thus, making Income Taxability more equitable.
Standard Deduction to Salaried Employees:
The ongoing recession and job lay-offs have already hit hard on the pockets of salaried employees. With the increase in prices and levy of GST on essential and daily use products, the salaried class hopes for an increase in the standard deduction from the existing Rs. 50,000 to Rs. 1 lakh. And, the same benefit is expected to be extended to the taxpayers opting for the new tax regime.
Revisiting Deductions under section 80:
The Income Tax Act provides several tax reliefs to us through deductions like 80C, 80D, 80CCD, 80TTA, etc. This has been a long pending demand of the Indian taxpayers and taking inflation into account, an upward updation is long due.
- Section 80C has always been the significant deduction claimed by the taxpayers and it is expected to be now enhanced from the existing Rs. 1.5 lakhs to at least Rs. 2.5 lakhs.
- Section 80D limit capped at Rs. 25,000 is expected to be revisited to Rs.50,000 and is a very prudent expectation, due to the increase in the cost of medical treatment and insurance.
- The deduction u/s 80CCD (1B) is over and above the deduction of Section 80C. The taxpayers expect it to increase to Rs. 1 lakh from the existing amount of Rs. 50,000.
- Section 80TTA is expected to increase from Rs. 10,000 to Rs. 50,000 for all.
Tax Deduction for Home Loan
Presently, an individual taxpayer can claim a max of 2 lakh deduction per financial year of interest paid on home loan for a self occupied property u/s 24.
However, with soaring property prices over the past few years, the govt. is expected to increase this limit further by 1 lakh.
Tax-Free Bank FDs:
These recent years have noticed a sudden shift in the investment portfolio of the youth from Bank FDs to the capital market investments like mutual funds and share market investments resulting in a liquidity crunch for the banks. Tax-free FDs shall help attract youth to see FDs as one of the most safe and attractive investment/saving option.
Simplification of Capital Gains Tax:
Currently, the capital gain tax regime is vast with different holding periods, tax rates, indexation rules, tax breaks, etc., making it complex and challenging even for experts.
As our capital market is expanding with a record increase in the Demat accounts being opened, the expectation to streamline the capital gain tax rules across equity, debt, gold and mutual funds are getting higher.
Taxation of Cryptocurrencies/Virtual Digital Assets (VDAs):
Cryptocurrency trade currently faces a 30% flat tax, 1% TDS, and no such provision to offset the losses. The crypto markets have seen a massive crash and investors incurred huge losses.
With no offsetting of losses, investors are in a dilemma. In this year’s budget, the taxpayers are seeking clarifications on the valuation, gifting of such assets, and also a one-time relief to carry forward the loss and set them off against the same crypto gains in the future just like speculative business loss.
Tax-free Pension for Senior Citizens:
Many senior citizens often rely on their savings and pension income. Currently, the income of retired persons is subject to income tax.
The entire pension amount accumulated including principal and interest is taxable. In this budget, the senior citizens expect that at least the principle component would be exempted from income tax.
Other demands on the wish list of the budget include abolishing dividend tax, slash in surcharge rates, integrated ITR forms, clarification on taxation of the online gaming industry, etc.
Government may not consider all the expectations of the general public as they have to consider the macro effect on the economy for every decision but Janta definitely expects some relief in some sectors.
The budget is expected to be focused around renewable energy, energy transition and the health sector. Furthermore, Considering the global economies sliding towards recession and the soaring inflation rates, we are keeping our fingers crossed and hoping that this budget shall finally bring some cheer into taxpayers’ lives by prioritizing taxpayer-friendly and business friendly policies.
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