Currently the minimum limit of tax exemption is Rs 2.5 lakh. There has been no change in this after 2014-15. At that time this limit was increased from Rs 2 lakh to Rs 2.5 lakh. In view of the increased need for savings after inflation and the Corona epidemic, the government can increase the basic limit to five lakh rupees.
The new tax slabs have failed to woo individual taxpayers even after two years. As on July 31, 2022, 5.83 crore individual taxpayers have filed income tax returns for assessment year 2022-23. Of these, the number of people who opted for the new tax slab was negligible. To attract income tax payers towards the new slab, the government may change the tax rates in the budget
- Tax exemption can be available on income up to Rs 5 lakh in the new slab. Now it is taxed at 5 per cent. The maximum slab of 30 per cent can be reduced to 25 per cent.
- Home loan interest can be exempted. Standard deduction can also be included in this.
Tax- free income may increase
At present, the minimum limit of tax exemption is Rs 2.5 lakh. There has been no change in this after 2014-15. At that time this limit was increased from Rs 2 lakh to Rs 2.5 lakh. In view of the increased need for savings after inflation and the Corona epidemic, the government can increase the basic limit to five lakh rupees. This will increase the spending capacity and the economy will benefit.
80C: There has been no announcement for years regarding the exemption available under Section 80C of the Income Tax Act, the limit of 2.5 lakhs. Due to the good current financial year on the tax collection front, the government may increase the exemption limit under 80C from Rs 1.50 lakh to Rs 2.50 lakh. The Institute of Chartered Accountants of India says that increasing the scope of 80C will give people a chance to save.
- The standard deduction limit may also be increased from Rs 50,000 to Rs 75,000.
PPF: Need to make separate provision from 80C
The annual limit for contribution to Public Provident Fund (PPF) may be raised to Rs 3 lakh from the existing Rs 1.50 lakh. This has not changed for many years. Experts say that many schemes of life insurance, children’s tuition fees, mutual funds already come under the purview of 80C. Hence, there is no scope for adequate contribution to PPF. Separate provision may be made for this.
The scope of 80D increased to reduce the burden Financial burden on the middle class has increased with the increased cost of health insurance after Corona. To reduce this burden, the scope of 80D can be extended to cover expenses like doctor fees and tests.
- Subhrajit Mukhopadhyay, executive director, Edelweiss Tokio Life Insurance, said that investment up to Rs 1.50 lakh is eligible for tax exemption under 80C. In such a situation, a separate provision for tax exemption can be made on the premium paid for life insurance.
- The GST rate on health insurance can be reduced from 18 per cent to 5 per cent.
Affordable housing: Need to amend the rule
Experts say that there is a need to reduce the interest rates on home loans to make home loans affordable. Although the loan rates depend on the policy rates of RBI, but the budget can give relief to home buyers by relaxing the rules for taking home loans. In this, the minimum limit of downpayment can be reduced.
- Deduction on home loan interest under 80EEA for home buyers may be increased from the existing limit of Rs 1.50 lakh to Rs 2 lakh.
- The price band for properties under affordable housing may be raised from Rs 45 lakh to Rs 75 lakh.