As the nation awaits the presentation of the interim budget on February 1, 2024, all eyes are on Finance Minister Nirmala Sitharaman, who is expected to unveil a series of tax relief measures. The upcoming budget, crucially timed ahead of the parliamentary elections, holds significant importance for the common man, particularly salaried employees and senior citizens. Here are the key expectations of the common man for Budget 2024.
Standard Deduction: A call for an inflation-adjusted increase
Tax experts are advocating for a substantial increase in the standard deduction, currently set at Rs 50,000. The expectation is firmly rooted in the proposal to elevate it to Rs 1 lakh in both the old and new income tax regimes. This adjustment is seen as essential to keep pace with inflation, providing individuals with more disposable income. The standard deduction, reintroduced in 2018 at Rs 40,000 and later increased to Rs 50,000 in the 2019 Budget, is now positioned for a potential boost to alleviate the financial burden on taxpayers.
Section 80D: Addressing rising healthcare costs
In the sphere of medical insurance premiums, taxpayers hope for an increase in the deduction limit under Section 80D. The common man anticipates the Finance Minister to push the limit from 25,000 up to Rs 50,000 for individuals and from Rs 50,000 to Rs 1 lakh for senior citizens. This adjustment aims to reflect the rising costs of healthcare. Additionally, there is a plea for extending Section 80D benefits to the new tax regime, promoting equitable access to healthcare and recognizing the changing dynamics of medical expenses.
Section 80C limit increase: Aligning with inflation
The Rs 1.5-lakh deduction available under Section 80C remains a primary incentive for individuals to opt for the old income tax regime. Considering the rise in the cost of living and retail inflation, there is a call for an increase in the Section 80C limit to offer relief to taxpayers. The common man expects the FM to raise the limit to Rs 3 lakh, accommodating various investments eligible under Section 80C, such as life insurance premiums, Public Provident Fund (PPF) etc.
Home loan tax benefit: Adapting to real estate dynamics
Homebuyers are eagerly anticipating changes in Section 24(b), which currently caps the deduction for interest on home loans at Rs 2 lakh. With the surge in loan amounts, interest rates, and real estate prices, experts argue that this cap is no longer sufficient. There is a strong expectation for a more flexible stance that aligns with the evolving dynamics of the real estate market. Homeowners are optimistic about a revision that acknowledges the current economic landscape and provides a more realistic home loan tax benefit.
Striking balance: Equitable tax regimes
In the previous budget, the FM raised the new tax regime to a higher standing, rendering the old tax regime less appealing. The old tax regime, which encourages investment habits, is now perceived as a secondary option. The common man anticipates a more balanced tax regime where both options appear equally attractive. All that the common man wants is a harmonised approach that considers the preferences and benefits of taxpayers.
The anticipation is high, and all eyes are on the finance minister to deliver a budget that fosters economic growth and eases the financial burden on the common taxpayer.
(Subin V R is a chartered accountant. Views expressed are personal)