Budget 2023: Income Tax Benefits That Salaried Individuals May Expect This Year

There are several expectations from taxpayers that include standard deduction hike and an increase in Section 80C exemption besides income tax relief

The biggest event of the year Union Budget 2023 is here. There are several expectations from taxpayers that include a standard deduction hike, and an increase in Section 80C exemption besides income tax relief. The income tax slab rates remained unchanged for the last couple of years. Tax experts are eying some tax relief in the Modi government's final full Budget to be presented ahead of the 2024 Lok Sabha election.

Experts have expressed hope that the finance minister will offer taxpayers more disposable income to spur spending that will aid the economy, according to the publication Mint report.

Standard Deduction Hike

The standard deduction is a deduction allowed from gross salary income for individuals and pensioners which aims to lower the individual's taxable salary income thereby lowering the tax burden as well. Going by the former tax structure, which is still utilised by the majority of filers, all salaried employees are entitled to a Rs 50,000 deduction.

“A deduction limit that has stayed steady in recent years should be increased to account for growing living costs," Livemint quoted Amit Gupta, MD, SAG Infotech as saying.

Increase 80C Exemption

Salaried individuals can also bring down their taxable income under Section 80C exemptions of up to Rs1.5 lakh in a fiscal year.

Tax expert Archit Gupta, Founder and CEO, of ClearTax in the Mint report, noted that the limit for 80C has been set to Rs1,50,000 for a long time. He said the limit for 80C is to be increased to meet the requirement of today to at least Rs2,00,000.

“The exemption ceiling should be increased to Rs 2.5 lakh in Budget 2023," added Amit Gupta. While Archit Gupta noted that the 80D limit for medical insurance premiums should be raised for senior citizens from Rs50,000 to Rs 75,000 to Rs 1,00,000.

Altering Tax Slab Rates

In the Budget 2020, finance minister Nirmala Sitharaman announced a new optional tax regime. However, the new tax regime is yet to find many takers.

“The smallest individual income tax bracket is 5 per cent, while the highest is 42.74 per cent, including surcharges and cess. A raise in the basic exemption level between Rs 2.5 lakh and Rs 5 lakh, as well as a cut in income-tax rates in Budget 2023, is required to reduce the maximum slab rate to 25 per cent," Amit Gupta said.

Stating that personal tax relief should be provided in the upcoming Budget, Siddharth Maurya, Resource Specialist, Expertise in Real-Estate and Fund Management said it could be done either through lower rates of taxation or by reorienting tax slabs. “Technical changes to various taxes are required to make them more progressive and effective,” the report quoted Maurya as saying.

While experts also seek some relief to be given to individual taxpayers who are setting up a home office for work from home.

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