The budget season is back! As days pass, the noise of taxpayers’ expectations is getting louder. So, what exactly are taxpayers expecting from Budget 2023?
What’s happening?
The budget season is back with a bang! On February 1, 2023, the Finance Minister, Nirmala Sitharaman, will present the Union Budget. As the days pass, the noise of taxpayers’ expectations is getting louder.
Firstly, let’s understand what the Union Budget 2023 aims to achieve. According to Outlook India, experts believe that Budget 2023 should widen the tax base, which will lead to high tax revenues and provide adequate relief to taxpayers.
Here are the expectations of taxpayers from budget 2023
Income Tax Exemption
The last two years have been difficult for salaried individuals as they have had to deal with inflation, high-interest rates, an increased cost of living, layoffs, and pay cuts. You would agree that many things have changed except for the tax slabs.
As the cost of living has been increasing, according to the Economic Times, experts believe the exemption limits should be reviewed and increased from Rs 2.5 lakh to Rs 5 lakh. If this recommendation comes into effect, it will boost consumption and lead to a quick economic recovery as individuals will have more money.
Higher 80C and 80TTA Limits
In the Pre-Budget Memorandum 2023, the Institute of Chartered Accountants of India (ICAI) suggested that the deduction limit of Rs 1.5 lakhs under Section 80D could be renewed to Rs 2.5 lakhs in the upcoming budget. This will provide savings opportunities to the taxpayers.
Similarly, the deduction under Section 80TTA (interest earned from savings and post office accounts) has been static at Rs 10,000 since 2012–13. According to the Economic Times, the limit should be increased to Rs 50,000 and include FD interest so that individuals inculcate the habit of saving.
Different Section for Children's Education Deduction
Educating a child is no longer affordable. Parents put a lot of effort into securing a good education for their children. Currently, the deduction for child education is allowed under section 80C. But, a child’s education is as important as getting insurance or investing. So, according to the Economic Times, experts say that the government could consider introducing a separate section under Chapter VIA to allow a deduction for education expenses.
Exemption Limit of Health Insurance
After the pandemic, people have understood the importance of opting for health insurance, as medical procedures today are expensive, and so are the insurance premiums. Currently, the deductions for health insurance premiums fall under section 80D, with a limit of Rs 25,000 to Rs 50,000. According to the Economic Times, the government should consider increasing the deduction limit from Rs 50,000 to Rs 1 lakh.
Deduction on Electric Vehicle Purchase
Individuals these days have started becoming environment- and pocket conscious and, hence, are opting for electric vehicles. A deduction is allowed on interest paid on loans while purchasing EV vehicles under Section 80EEB. But there might be a few individuals who buy EVs without taking a loan. Hence, the government may consider allowing a deduction for self-financed first-time EV buyers.
What’s next?
These are recommendations offered by experts, which may seem lucrative to us. But the decisions would be taken based on how these actions would impact the government's finances and tax collections.
So, let’s stay enthusiastic about the upcoming budget, hoping that we find some great things in the box!
