Demand for Raising the Bar for a Range of Personal Tax Deductions in Budget 2024 to Encourage Savings

Delhi, New: There has been a great deal of expectation and build-up over personal taxes ahead of Finance Minister Nirmala Sitharaman’s announcement of the Interim Budget.

Major announcements are not anticipated since this budget will be a vote-on-account/interim budget. Nonetheless, there are some expectations this time around, following the lead set by the last interim budget that was released in 2019 and included certain tax ideas. In general, taxpayers anticipate that the next budget will allay their worries and give India’s personal taxation system a much-needed boost.

In order to shield taxpayers from the growing expense of living, the government should also think about indexing tax slabs to inflation, according to Grant Thornton Bharat Partner Akhil Chandna.

Lower- and middle-class taxpayers expect that a decrease in tax rates or an increase in tax slabs would provide some relief.

“The government has made a number of changes to the tax code in recent years to make it more taxpayer-friendly and straightforward. Although the new tax system’s reduced individual tax rates were a welcome change, their effect was lessened since they were equal to the deductions and exemptions available under the previous tax regime. Thus, in order to encourage savings and investments, taxpayers anticipate that the government would find a compromise between lowering tax rates under the new tax system and raising the threshold for different deductions/exemptions, according to Chandna.

Higher deduction limits for things like u/s 80C (PPF, LIC, etc.), 80D (health insurance premium), and home loan interest payments were anticipated under the previous tax system. Additionally, it is anticipated that the standard deduction under both tax regimes would increase to reflect the inflation that has occurred over the last five years,” he said.