Expected things in Budget 2023 related to Income Tax Rule
The Union government’s final full budget before the 2023 Lok Sabha elections is the budget for 2023. It is anticipated that the government would take advantage of this occasion to provide a budget that is focused on job creation and investment-driven development and is growth-oriented. Taxpayers may also receive some benefits from the budget in 2023 because giving them more money could have a good effect on a number of other industries. The top five expectations for income tax rule adjustments for the benefit of taxpayers from Budget 2023 are listed below.
5 Things expected in Budget 2023 related to Income Tax Rule
The five things that are expected to change in the Union Budget 2023 related to Income Tax Rule are:
First thing expected in Budget 2023 related to Income Tax Rule: Section 80C Limit Change
- The most popular way for taxpayers to reduce their tax burden is through a deduction under Section 80C of the Income Tax Act.
- This chapter discusses PPF/EPF, ELSS, NSC, NPS, SSY, and other topics.
- Since 2014, Section 80C’s annual deduction cap of Rs. 1.5 lakh has not been changed.
- This year, the government is anticipated to raise the cap to at least Rs 2 lakh or Rs 2.5 lakh.
- Even the suggestion that this cap be raised to Rs. 3 lakh has come from certain experts.
- The 80C reduction has not changed for several years.
- The Finance Act of 2014 established the current cap of Rs. 1.5 lakh.
- The above limit should be extended to Rs 2.5 lakh due to inflationary trends.
Second thing expected in Budget 2023 related to Income Tax Rule: Basic Exemption Limit Change
- The government should raise the baseline exemption amount under the Income Tax Act to Rs. 5 lakh, according to a number of tax experts.
- Both the new and the previous income tax regimes now have a ceiling on basic income tax exemptions of Rs 2.5 lakhs per year.
- As a result, people who make up to Rs. 2.5 lakh per year are not required to pay any taxes.
- Prior budget changes effectively rendered annual income up to Rs 5 lakh tax-free.
- The basic exemption cap, however, has not been altered since FY 2014–15.
- The Government could also think about removing the tax on dividend payouts, reducing the tax bracket for investors, and raising the basic tax exemption level from 2.5 lakhs to 5 lakhs or more in order to put more money in the hands of our people.
- People will be able to invest more money if they have more money in their pockets.
Third thing expected in Budget 2023 related to Income Tax Rule: Higher Section 80D
- Since the pandemic began, medical bills have risen and even become expensive.
- Therefore, according to several experts, the Government should raise the Section 80D deduction cap for health insurance.
- It is currently restricted to Rs 25,000.
- Increased affordability and an increase in people choosing health insurance for their families and elderly parents will result from raising the threshold for section 80D tax deductions.
- People are starting to think about purchasing higher-sum insured health insurance plans that offer comprehensive coverage against all diseases as a result of the Covid pandemic experience and rising hospitalisation costs.
- The increase in the section 80D limit will persuade people to choose a health insurance strategy with a sufficient amount insured to protect the wellbeing of their loved ones.
Fourth thing expected in Budget 2023 related to Income Tax Rule: Better Home Loan Tax Incentives
- The tax exemptions on principal and interest payments on mortgages should be increased, according to some experts, and should be included in the forthcoming Budget.
- For a self-occupied house, the maximum tax deduction for home loan interest payments is Rs 2 lakh every fiscal year.
- But over the last five years, home prices have increased all throughout the nation.
- Over the years, the nation has also seen inflation of 6% to 7%.
- The tax saving threshold of Rs. 2 lakh on housing loans under section 24(b) needs to be enhanced in light of the current ranges in home prices.
- Regardless of the cost of the property, the maximum must be increased to at least Rs. 3 lakhs.
Fifth thing expected in Budget 2023 related to Income Tax Rule: LTCG Tax Relief
- Some business professionals have recommended that the government offer LTCG tax relief to retail stock and mutual fund investors in the market through Budget 2023.
- If the capital gain exceeds Rs 1 lakh in a financial year, the 10% LTCG on equity will be removed, which will be advantageous.
- The introduction of a tax exemption on STCG up to Rs 1 Lakh would also be great.