New Delhi: Salaried employees contribute a major share of India’s tax collection, but receive fewer exemptions. However, many income tax (I-T) experts are of the view that salaried employees can expect some relief in the forthcoming Budget to be presented on February 1, 2023. On the other hand, some believe that Finance Minister is unlikely to present a populist Budget next year.
Sumit Mangal, a partner in Luthra and Luthra Law Offices India is of the view that salaried employees can expect validation of income tax slab rates – in terms of limits as well as tax rates. He said, “Increase in limit of the standard deduction, either as a fixed increase or introduction of the progressive standard deduction based on total salary can also be expected from Budget 2023.”
On the other hand, Maneet Pal Sing, partner at I.P. Pasricha & Co., said, “Budget 2023-24 is the last Union Budget of the Modi government before the 2024 polls and hence it can be expected to be taxpayer-friendly.” The focus of the Budget is likely to be on benefits that could be provided to a taxpayer. However, he added that keeping in view that the Indian economy has started to recover from the scars of the Covid-19 pandemic fiscally, the government will ensure to align its goal of preparing the Budget to boost economic growth along with thrust on expectations of taxpayers.”
A rise in Section 80C limit
An increase in the limit for Section 80C deduction (now capped at Rs. 150,000) is expected, in view of high inflation and to reassure personal savings and investments. The last increase in this limit was about a decade back.
According to Singh, “Deduction based on tax saving investments u/s 80C of the Income Tax Act,1961 has seen no increase since Financial Year 2014-15 of Rs.1,50,000. It is expected that the same will be established at Rs.2,50,000 respectively. It will help the salaried class promulgate their investments simultaneously reducing their tax liability and thereby enjoying the lowest tax slab,” Singh told FE.
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