Taxpayers nationwide are excited to find out if they will be getting any income tax relief this time around when Finance Minister Nirmala Sitharaman presents the Union Interim Budget on February 1. Even though a comprehensive budget is not anticipated, there is optimism about certain good adjustments, particularly for the taxpayers.
According to tax experts, significant tax savings might not materialize until after the 2024 Lok Sabha elections and the establishment of a new administration. This interim budget does, however, contain a few small changes that could provide some relief for taxpayers.
1. Maximum Section 80D Deduction:
It is anticipated that the Section 80D medical insurance premium deduction cap would rise in response to growing medical expenses. Tax experts predict increases for the general population of Rs 25,000 to Rs 50,000 and for elderly persons of Rs 50,000 to Rs 75,000. There are also rumors that the new tax structure may include Section 80D advantages, which would allow for tax breaks on medical services.
2. Bengaluru's HRA exemption as a Metro Area
Bengaluru is classified as non-metropolitan for income tax purposes even though it is a metropolis according to the Indian Constitution. Experts suggest that the city be classed as a metro city in this budget, bringing it into line with other large cities and raising the HRA exemption ceiling from 40% to 50%.
3. Simplifying capital gains taxes:
Experts in taxes draw attention to how complicated the existing tax code is when it comes to investment income. Simplifying indexation regulations and guaranteeing parity in the taxation of listed and unlisted stocks are two recommendations. The goal of this action is to reduce confusion and streamline the tax process for investors.
4. Maximum TDS deduction for homeowners:
TDS reduction on property purchases is now limited to Rs 50 lakh, with a 1% TDS deduction on amounts above this cap. It is anticipated that the interim budget will clarify regulations pertaining to NRI sellers and provide greater clarity and understanding about TDS reductions for real estate purchases.
