Union Budget 2023: Here are the Top 5 personal tax expectations
The Union Budget is an annual event that is extremely important for businesses, individuals, investors and the whole economy. The Union Budget is announced by the Union Finance Minister and consists of key details like the capital expenditure and the changes in tax policies that are likely to take place. Individuals, especially the ones earning a fixed income should pay keen attention to the union budget proposals as there might be significant changes in the taxation policies that might affect various taxpayers. Therefore, individuals and businesses have certain personal tax expectations from the budget. In this article, we will go over the top 5 personal tax expectations from the Union Budget of 2023.
Increase in Standard Deduction
An important part of calculating taxes is the amount that is deducted from the gross income of an individual. This amount is known as the standard deduction. This amount can be claimed any individual earning a salaried income. The inclusion of the standard deduction is immensely helpful for individuals as it can help them in reducing their total taxable income. Currently, the standard deduction is Rs 50,000. One of the personal tax expectations from budget 2023 is an increase in the standard deduction amount.
Changes in the Tax Slab
One of the major parts of the Union Budget is the tax slabs. Any individual carefully looks at the tax slab to see if they fit into the tax bracket. The basic tax exemption limit is Rs 2.5 lakh. This limit has not been changed for long. Taxpayers expect the basic exemption limit to be increased to at least Rs 5 lakh under both, the old and the new tax regime. With growing inflation, it would be beneficial for taxpayers as it would increase the net disposable income in their hands. Similarly, adjustments in the other slab rates are also expected accordingly under both regimes.
Increase in Section 80C
Section 80C of the Income Tax Act is a particularly important section for taxpayers. It allows individuals to claim up to Rs 1.5 lakh as tax deductible by investing money into various tax-saving investment options. An expectation from the Union Budget of 2023 is that the deductible amount under section 80C should be increased to Rs 2 lakh or 2.5 lakh.
Changes in Section 80D
Section 80D of the Income Tax Act allows an individual to claim a tax deduction of up to Rs 25,000 for the premiums paid to get medical insurance, paying for preventive health check-ups or other medical expenditures. The COVID pandemic has made more people aware of the importance of medical insurance. Increasing medical expenses and growing inflation has led many people to expect that the deductible amount under Section 80D should be increased.
Tax exemption for homebuyers
Under section 24b of the Income Tax Act, homebuyers can claim a tax deduction of up to Rs 2 lakh on the annual interest paid on their housing loans. Homebuyers, especially the salaried class, are now expecting the government to provide additional incentives in Union Budget 2023 by increasing this deduction limit to up to Rs 5 lakh. Homebuyers can also claim a deduction of up to Rs 1.5 lakhs for the principal amount paid on a housing loan under Section 80C.
Hopes of all the classes of society run high ahead of the Union Budget. Individuals and taxpayers have certain expectations from the budget and so do large corporations. Any changes in the tax policy in favour of salaried individuals can help individuals have more disposable money in hand with growing inflation and costs.
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