Union Finance Minister Nirmala Sitharaman is about to present the Union Budget 2023–24 on February 1, 2023, while the Economic Survey report for the year 2022–23 will be unveiled on January 31.
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The greatest contributors to tax in India are the salaried individuals, who are looking forward to the upcoming budgetary year of the year 2023-24 and expect there will be some favorable changes made in Section 80C and Section 10(13A) of the Income Tax Act of India.
Increase in Income tax exemption limit
The current income tax exemption limit is Rs 2.5 lakh for assessees who do not have to pay taxes because their annual earnings are less than Rs 2.5 lakh. Despite the individual’s income of up to Rs 5 lakh being taxable yet obtaining the tax-free state owing to the rebate provided by Section 87A of the Income Tax Act.
If a person’s income exceeds Rs 5 lakh, they are required to pay taxes, increasing their tax liability. Therefore, requests have been coming from all middle-class individuals to increase the tax exemption limit.
Associated Chambers of Commerce and Industry of India (ASSOCHAM) proposed the Government increase the tax exemption limit from Rs 2 lakh to Rs 5 lakh in Budget 2023.
Increase in HRA
While the company is in the process of easing the working options to retain their employees in the organization as the demand for work-from-home culture has drastically increased post-pandemic situation, the employees keenly looking for some modifications and changes in the Housing Rent Allowance whilst the rentals of the house eventually getting raised in the last two years. The demand for increasing the house rent allowance limit tremendously widened.
The employees are bound to pay electricity expenses and internet expenses from their pocket and considering these prevailing hurdles the Government has to introduce a ‘Work from Home allowance’ to provide tax benefits to the salaried class.
Tax incentives for salaried class
In the previous budget, the government didn’t announce any incentives or benefit plans for the salaried class. We can now expect the standard deduction of Rs.50,000 must be improved to a reasonable limit of Rs.80,000.
Change in New Tax Regime
Change in the special tax regime to make it more attractive for salaried taxpayers that enable them in aligning their investment plans accordingly.
Salaried employees expect rationalization of income tax slab rates in terms of both tax limits and tax rates. The budget for 2023-24 may include an increase in the standard deduction limit, either as a fixed increase or through any progressive standard method.