What can a common man expect from Union Budget 2023?
The expectations are soaring sky high with the upcoming Union Budget which is to be presented on the 1st of February, 2023. Since there have been no changes in the income tax rates since 2017-2018 and even after introducing the new tax regime in 2020-21, the majority of the people are opting for the old tax regime due to provision for availing the deductions and exemptions which are not there under the new tax regime, a common man of the country is expecting this Union budget to change the scenario and offer better income tax rates and regime and also tax slabs. Let’s take a closer look at the expectations which are budding in the minds of the citizens of the country with the upcoming budget.
#1 Revised Income Tax Rates and Tax slabs
Out of all, if one expectation is there for every common man about this budget is the revision of the income tax rates. As per the regular tax regime, if taxable income is up to Rs. 5 lakhs then you do not have to pay any income tax, however, the moment taxable income goes above Rs. 5 lakhs, a 20% rate would be applicable. This is something that bothers the taxpayers, especially those who fall under the tax bracket of Rs. 10 lakhs per annum. And if they opt for the new tax regime, it means, giving up the deductions available under section 80 C, exemptions like HRA and others. This will increase the taxable income and thus the amount of tax payable. So, people are expecting a decrease in these tax rates.
#2 Hike in 80 C deductions and standard deductions
Section 80 C offers deductions for various investments like LIC, ELSS, PPF and others and the number of people investing in these schemes is increasing with the increasing financial awareness but the limit of Rs. 1.5 lakhs for 80 C deduction hasn’t been changed for years. People are expecting a hike of this limit to at least Rs. 2.5 lakhs so that they can save more taxes by investing more amount.
People are also expecting a hike in the standard deduction which is at present Rs. 50,000. As per the surveys, they want this limit to be Rs. 1 lakh.
#3 Change in New Income Tax Regime
While the new tax regime was introduced in 2020-21, as per some reports, only 18.75% of Indian citizens have opted for this regime while 60% of the taxpayers chose to go with the old or regular tax regime. The reason is pretty clear and that is the non-availability of deductions and exemptions under the new income tax regime. This is why general people are expecting a new version of the new income tax regime. As per surveys, around 70% of the respondents want the 30% tax rate for income above Rs. 15 lakhs to change to Rs. 25 lakhs. There is a valid point that many experts as well as the common man suggest that is the government reduced the corporate tax rate to 25% but a person earning even little above Rs. 15 lakhs has to pay 30% under the new income tax regime, while if they opt for the older regime, then if the taxable income is above Rs. 10 lakhs, 30% income tax would be charged, which seems unfair for the general people.
#4 Tax Benefits for Work from Home
Working from home has become hugely popular with the pandemic and it is now the new normal. While WFH is great as there is no need to travel to the office every day and thus save travelling expenses, it comes with other expenses which are mainly setting up your home as the office. For this people who are working from home are expecting certain deductions for all these costs they have to incur for their home office.
#5 Ease of tax filing and reduction in tax refund duration
Last year, it took around 2-3 months for the tax refunds to happen, which worried many taxpayers. The CBDT has been considering and already proposed a single ITR form for all while ITR-1 and ITR- 4 will be there too. This is expected to reduce the processing time of the tax return filings and also help the taxpayers to receive their refunds within a shorter duration.
With all these expectations, the common man is waiting for 1st February like never before with his fingers crossed.
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