Important Things Taxpayers Are Hoping for in Budget 2024

As Budget 2024 approaches, people all over the country are excited to see what changes it will bring to their finances. The budget isn't just about numbers; it's about hope for better times ahead. In this article, we'll take a closer look at what taxpayers are hoping to see in Budget 2024. From simpler taxes to relief from rising prices, taxpayers have a lot on their wishlist. Let's explore their expectations and see what they want in the upcoming budget.

1. Raising The Section 80C Deduction Limit

Many individual taxpayers have been hoping for an increase in the Section 80C deduction limit, which has yet to be revised since 2014 when it was set at Rs 1.5 lakh. This deduction is crucial for taxpayers under the old tax regime. Given the rising cost of living, raising the deduction limit to at least Rs 2 lakh from the current Rs 1.5 lakh would greatly ease the financial burden for many.

2. Tax Benefits For Homebuyers

Individuals purchasing homes through housing loans can enjoy tax benefits. According to Section 24 of the Income Tax Act, homebuyers can claim deductions of up to Rs 2 lakh annually on the interest paid towards their home loan EMIs. Additionally, under Section 80C of the I-T Act, they can claim deductions of up to Rs 1.5 lakh on the principal amount paid. Tax experts suggest that the deduction under Section 24 should be increased to at least Rs 5 lakh, considering the rise in both home loan interest rates and property prices. Similarly, the limit for deductions on housing loan principal repayments under Section 80C should be expanded, either by increasing the Section 80C limit or introducing a separate deduction specifically for home loans.

3. Making the New Tax Regime More Compelling

Although the New Tax Regime now serves as the default choice with lower tax rates compared to the Old Tax Regime, recent studies indicate that many taxpayers still prefer the latter due to various reasons. To make the New Tax Regime more enticing, the Finance Minister should consider several measures. These include reducing the highest tax rate from 30% to 25% and raising the income threshold for this top rate from Rs 15,00,000 to Rs 20,00,000.

Furthermore, allowing taxpayers to offset house property losses under the new regime would provide a significant incentive for individuals to transition to this system. This adjustment could help compensate for some of the deductions lost under the old regime, offering additional appeal to taxpayers considering the switch.

4. Raising The Standard Deduction Limit

Since the Financial Year 2018-19, salaried individuals have lost exemptions for travel allowance and medical reimbursement, replaced by the standard deduction. To address the mounting expenses related to healthcare and transportation, there is a pressing need to increase the standard deduction limit from the current Rs 50,000 to Rs 100,000 annually. This adjustment would also ensure parity with individuals earning income from business or profession, who have the option to claim actual expenses or opt for a presumptive basis of taxation based on a percentage of gross income.

In addition to these expectations, many taxpayers are hoping for additional incentives from the government. These include raising the limit for deductions on health insurance premiums under section 80D of the Income Tax Act. 

Furthermore, there's a desire to expand the list of cities eligible for a 50% House Rent Allowance (HRA) tax exemption. However, whether these aspirations will be met in the interim budget or if they'll be left disappointed, is something that we'll have to wait!

Also Read: New Rules For IMPS Money Transfer Effective February 1

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