1. Top income tax expectations from Union Budget

Top income tax expectations from Union Budget

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3 min read • Updated: February 2, 2024, 2:31 PM

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Summary

The Union Budget 2024-2025 is anticipated to address key areas like personal income tax, especially focusing on the new tax regime. It also aims to look into the streamlining of capital gains tax and improving the ease of compliance with Tax Deducted at Source (TDS) procedures. These areas are typically highlighted as they are often points of interest and discussion in budgetary considerations.

The upcoming Union Budget for the fiscal year 2024-2025, scheduled for presentation on February 1, will be an interim budget ahead of the impending Lok Sabha elections. Hence, the Finance Minister is widely expected to refrain from making any major populist announcements.

Nevertheless, the taxpayer community has heightened expectations, particularly in the realm of income tax reforms. Key anticipations revolve around some relief in personal income tax, with a specific focus on the new tax regime. Additionally, measures to streamline capital gains tax and facilitate greater ease in Tax Deducted at Source (TDS) compliance are also expected in the budget.

Here are some of the top expectations in income tax from Budget 2024:

Increase in tax rebate under New Tax Regime: Taxpayers expect the Finance minister to increase the personal income tax rebate to ₹7.5 lakh from the current ₹7 lakh for those choosing the New Tax Regime. In the last year’s budget, the threshold for income-tax rebate was raised from ₹5 lakh to ₹7 lakh for assesses opting for the new direct tax regime. This expectation reflects a desire for continued relief and aligns with the ongoing discussions on potential adjustments to income tax structures.

Increase in 80D deduction limit:

One noteworthy expectation from the upcoming budget is a potential increase in the deduction limit under Section 80D for medical insurance premiums. With healthcare costs rising, taxpayers are eagerly anticipating an adjustment in the current limits. They expect to increase the deduction limit to ₹50,000 from the existing ₹25,000 for individuals, and for senior citizens, the expectation is to raise it to ₹75,000 from the current ₹50,000.

Simplification of capital gains taxation:

The way capital gains tax works right now can be quite confusing and challenging for investors due to factors like asset classes, holding periods, tax rates, and residency status.

TDS compliance for home buyers:

The existing system imposes a 1% Tax Deducted at Source (TDS) on property transactions exceeding ₹50 lakh. Although the process is relatively straightforward for resident sellers using Form 26QB, it is more complex for Non-Resident Indian (NRI) sellers. The government is expected to ease this TDS compliance.

Revised GST return form A key expectation also revolves around the introduction of an updated annual GST return form. This revision would help taxpayers to rectify errors in the GSTR-9 form, particularly concerning B2B transactions. The objective is to mitigate the likelihood of unnecessary scrutiny by tax officers, stemming from inadvertent errors in the initially filed returns. This measure is anticipated to streamline the compliance process and enhance greater accuracy in GST reporting.