The salaried class eagerly awaits the upcoming budget, hoping for significant tax relief after finding little in the interim budget of 2024. Substantial tax reforms are anticipated to alleviate the burden and increase savings for taxpayers, especially the middle class. Personal Finance Experts foresee potential changes such as reducing the highest tax rate in the new tax regime, increasing the standard deduction, and raising the threshold for the highest tax rate in the old tax regime. They believe the government will address the shortcomings of the new tax regime introduced in Budget 2023, which did not attract as many taxpayers as expected.
Expectations of the Salaried Class from Budget 2024
1. Tax Rate Reductions
Divya Baweja, Partner, Deloitte India: “While changes provided in Budget 2023 in the new tax regime persuaded taxpayers to switch, the shift is still not as expected. The government is expected to consider reducing the highest tax rate of 30% to 25% under the new tax regime and increase the standard deduction from the current threshold of INR 50,000.”
2. Threshold Adjustments and Deduction Limits
Divya Baweja, Partner, Deloitte India: “Further, the government may also look at increasing the threshold limit for the highest tax rate from INR 10 lakhs to INR 20 lakhs under the old tax regime, and increase the limit of 80C, as an interim measure.”
3. Standard Deduction Enhancements
Garima Tripathi, Partner, V Sahai Tripathi and Co, Chartered Accountants: “The upcoming Budget 2024 brings high hopes for the middle class, particularly regarding increased savings under the old tax regime. One key expectation is the Section 80C deduction limit increase from the current ₹1.5 lakhs to possibly ₹2.0 lakhs.”
CA Abhishek Jain, Partner, Kailash Chand Jain & Co: “An increase in the standard deduction, last revised to ₹50,000, is also expected. This would lower taxable income, providing significant relief amid inflation and rising living costs.”
4. Capital Gains and Investment Incentives
Garima Tripathi, Partner, V Sahai Tripathi and Co, Chartered Accountants: “Many people hope that the Long-Term Capital Gains (LTCG) exclusion ceiling will be raised from ₹1 lakh to ₹1.5 or 2 lakhs, given the growing interest in trading.”
5. House Rent Allowance (HRA) and Other Allowances
“Key expectations include higher House Rent Allowance (HRA) exemptions to offset rising rental costs, particularly in metropolitan areas. This would reduce taxable income and increase affordability for those living in rented accommodations.”
This comprehensive outlook reflects the high hopes the salaried class holds for the upcoming Budget 2024, emphasizing potential measures that could significantly improve their financial well-being.