edited by: Mohammad Haris
Last Update: January 26, 2023, 11:45 AM IST
Income tax is levied on the taxpayers on the basis of slab system.
According to various media reports, the government has held detailed discussions to reform the new personal income tax regime without any exemptions.
Some changes are expected in the Union Budget 2023-24, which is likely to be presented on February 1. Income tax rules. According to various media reports, the government has held detailed discussions to reform the new personal income tax regime without exemptions, with a new scheme to be announced in Budget 2023. Here are five major changes expected in income tax rules.
excess tax rebate or exemption
It is expected that the government may provide relief to individual taxpayers by increasing the tax exemption or exemption limit. Salaried employees are one of the major tax contributors in India. His annual salary up to Rs 2.5 lakh is tax free. Income tax is levied on the taxpayers on the basis of slab system.
However, their salary is also tax-free if it is less than Rs 5 lakh in a year. However, this is an exemption under section 87A and not a rebate. If the salary exceeds Rs 5 lakh in a year, tax will be applicable on the entire amount except the exemption limit of Rs 2.5 lakh. Now there is a demand to increase the exemption limit to Rs 5 lakh.
Tax deduction limit increased
Income tax deductions refer to specific deductions, which a taxpayer is eligible for on account of investment made (section 80C) or amount spent (section 80D or section 80E).
In the Union Budget 2023-23, there is a demand to increase the deduction limit under Section 80C from the existing Rs 1.5 lakh. The real estate sector has also been urging the government to provide a separate deduction for realty purchase apart from section 80C. The current 80C limit was set about a decade ago.
more home loan tax incentives
There are also expectations of an increase in tax exemption on home loan principal and interest payments.
“The maximum tax deduction that can be claimed on home loan interest payment is Rs 2 lakh per financial year on a self-occupied property. However, property prices across the country have gone up in the last five years. The country has also seen inflation of 6-7 per cent in the last few years. Keeping in view the current price band of houses, there is a need to increase the tax saving limit of Rs 2 lakh on home loan as per section 24(b). The limit needs to be increased to at least Rs 3 lakh, regardless of the value of the property, said Abhishek Soni, CEO and co-founder of Tax2Win.
LTCG tax relief
Expectations are also that the government will provide long-term capital gains (LTCG) tax relief to retail mutual fund and stock investors in the market through Budget 2023.
“It would be beneficial to remove LTCG on equity, which is currently 10% if the capital gain exceeds Rs 1 lakh in a financial year. It would also be ideal to give tax exemption on STCG up to Rs 1 lakh, Maheshwari said.
tax incentives on insurance
Tax incentives on insurance are also expected to increase.
Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance said, “The Union Budget is an opportunity to introduce large scale new reforms for the betterment of the citizens and the country. As the life insurance sector, our foremost interest has always been to insure more citizens and ensuring that they have appropriate coverage.”
He said that our collective initiative in this direction would get a boost if the government could introduce a separate tax deduction limit specifically for life insurance premiums paid. “We would also request that the government bring life insurance annuity or pension products at par with NPS, especially from the point of view of tax deduction. We believe this will help citizens plan for regular income during their retired years in an effective manner.”
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