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Income Tax Expectations from Union Budget 2024

The Union Finance Minister will introduce the Interim Budget on 1 February. Even though the finance minister has said that the upcoming budget will not have any major announcements, the common man expects some tax exemptions or waivers. The expectation is around tax relief in tax regimes. Also, there is some expectation around streamlining capital gain taxes for investors. Let us look at tax expectations from Union Budget 2024 in detail.

Increase in tax rebate under New Tax Regime

The point on top of the expectation list is an increase in tax rebates under the new tax regime. In last year's budget, the finance minister said that those opting for the new tax regime would get tax rebates up to Rs 7 lakh. It means that those individuals with taxable income up to Rs 7 lakh will receive Rs 25,000 as tax relief - they don't have to pay taxes up to this income level. Now, the expectation is to increase the tax rebate to Rs 7.5 lakh, which will provide the desired relief for a large number of taxpayers.

Increase in 80D deduction limit

Section 80D of the Income Tax Act in India provides deductions for premiums paid on health insurance policies. The expectation from the upcoming budget is to increase the limit under Section 80D for medical insurance premiums. Healthcare costs have increased drastically in recent years, and the common man expects changes in the limits under Section 80D. For individuals, the expectation is that the deduction limit should increase from Rs 25,000 to Rs 50,000. For senior citizens, the expectation is that the limit should increase from Rs 50,000 to Rs 75,000.

Simplification of capital gains taxation

The capital gain structure is quite complicated in India - the calculation for taxation for capital gains varies across asset classes, holding periods, and residency status. One noteworthy expectation from the taxpayer is to have better clarity of debt and equity instruments. Also, the expectation is to unify the tax treatment for unlisted and listed securities. Finally, the expectation is that indexation is introduced to adjust purchase prices for inflation which would make the tax framework better for investors.

TDS compliance for home buyers

The current rule is that there will be a 1% Tax Deducted at Source (TDS) on property transactions over Rs 50 lakh. Using Form 26QB, the process is straightforward for resident sellers. However, it is more complex for Non-Resident Indian (NRI) sellers. The upcoming budget is expected to ease this TDS compliance.

Revised GST return form

The final expectation that we cover here is around the introduction of an updated annual GST return form. It will help taxpayers rectify errors in the GSTR-9 form, particularly B2B transactions. The objective is to mitigate the likelihood of unnecessary scrutiny by tax officers, stemming from inadvertent errors in the initially filed returns. The change is anticipated to enhance greater accuracy and streamline the compliance process in GST reporting.


Even though there won't be major updates, if these small expectations are announced in the upcoming budget, it will be a great relief for taxpayers and will be well received by the common taxpayers and investors.