As the nation anticipates the unveiling of the interim budget in February 2024, taxpayers are keeping a close eye on potential changes that could impact their financial landscape. While major policy shifts are unlikely due to the interim nature of the budget, key expectations and wishlists are circulating among the public.
Basic Tax Relief: Easing the Burden on Taxpayers
The Income Tax Act currently provides a basic exemption limit of Rs. 2,50,000, a threshold that has remained unchanged for several years. With rising inflation, increased living costs, and the passage of time, taxpayers are hopeful for a positive change in the upcoming budget.
Analysts project an increase in the basic exemption limit to Rs. 3,50,000, a move that would benefit a significant portion of the 7 crore taxpayers. Such an adjustment aims to provide individuals with a measure of relief against the impact of inflation, aligning with the evolving economic landscape.
Section 80C of the Income Tax Act is a popular avenue for taxpayers to leverage investment-linked deductions. Investments such as Provident fund, ELSS, life insurance premium, housing loan repayment, and 5-year bank deposits fall under this section. The threshold limit for deductions, last revised in the Budget 2014, stands at Rs. 150,000.
Considering the financial uncertainties prevailing in the economy and the inflationary pressures over the years, there is a call for an enhancement of the threshold limit under Section 80C. Analysts propose an increase to Rs. 200,000, providing taxpayers with more room for financial planning and bolstering their quest for long-term security.
Interim Budget Dynamics
Interim budgets typically function as a continuation of existing policies, avoiding drastic alterations or the introduction of new initiatives. This approach is designed to maintain stability during transitional periods, especially when general elections loom on the horizon.
The Finance Minister has indicated that the 2024 interim budget will adhere to this historical pattern, with no dramatic changes anticipated. The focus remains on steering the nation through the transitional phase, ensuring economic stability despite the impending political shifts.
As the public eagerly awaits the interim budget, the expectations outlined above reflect the desire for a tax regime that aligns with the current economic realities. While taxpayers hope for relief through an increased basic exemption limit and enhanced investment-linked deductions, the overall approach remains cautious and consistent with historical patterns. The interim budget, true to its nature, is expected to strike a delicate balance between continuity and addressing the evolving needs of the citizens. As the budget unfolds, individuals and businesses will keenly observe the fiscal measures that shape their financial landscape in the coming months.