Expectations for the interim budget are high among taxpayers, who hope Finance Minister Nirmala Sitharaman will address various concerns in the upcoming statement. Scheduled for February 1, the interim budget covers the first three months of the next fiscal year until the formation of a new government after the Lok Sabha elections. Despite the interim nature of this budget, taxpayers, particularly the common man, have expressed several desires for Sitharaman to consider.
One primary expectation is a revision in tax slabs. With inflation and increasing prices affecting households, people anticipate relief from the financial burden through potential tax decreases. The income tax slab is a focal point of interest, and taxpayers hope for a revision that could lead to lower tax obligations or expanded income brackets.
Tax rebates and exemption limit adjustments are also on taxpayers’ wish lists. Last year, Sitharaman increased the income-tax rebate threshold and the basic exemption limit. There is a call for further adjustments, with the expectation of an increase in the tax rebate to Rs 7.5 lakh to relieve middle-income taxpayers.
Concerns have been raised about the current capital gain tax system, with calls for a revision in the taxation slabs for different asset types, simplifying the classification of assets as short-term or long-term, and standardizing tax rates across asset classes.
The New Tax Regime introduced altered tax slabs and concessional rates, but taxpayers seek more benefits under this regime to encourage its acceptance. Suggestions include allowing deductions for contributions to the Provident Fund (PF) and National Pension System (NPS) under the New Tax Regime.
A notable request is the reinstatement of National Pension System (NPS) deductions under Section 80CCD(1B) for taxpayers opting for the New Tax Regime. The removal of this deduction from April 1, 2023, is seen as a setback, and there is a call for its return, possibly with an increased limit.
Lastly, taxpayers are urging the removal of Goods and Services Tax (GST) from insurance policies. The current GST rate of 18% is considered high, and taxpayers propose its re-evaluation to ensure that the pricing advantage of insurance products is passed on to consumers, promoting greater investment in life insurance products. Additionally, there are expectations for an increase in the tax exemption limit under Section 80C to encourage savings, promote insurance coverage, and stimulate economic growth. For more information, stay tuned to the IncBasil Website.
