An Overview
Every January brings with it new expectations and aspirations, one of which is a Union Budget 2023 wishlist for salaried individuals, businesses and financial specialists alike. But, of course, the long-term objectives are always tax savings, reduced tax rates and compliance ease. This year is no exception.
Common Man's Expectations
The baseline exemption level has not been adjusted in almost 10 years. Instead, the government steadily raised the amount of refund a taxpayer may claim on earnings less than ₹5 Lakhs each year. A new tax system was also implemented; however, it was unpopular with most taxpayers owing to its confusing structure and lack of deductions.
People are particularly hoping that this year there will be a change in deduction limits and tax slabs, as well as an increase in the basic exemption level. This will allow them to decrease their overall tax payment as much as possible. However, the maximum for the 80C deduction has also remained the same for more than a decade, and both taxpayers and tax experts are keeping their fingers crossed that it will be raised to at least ₹2.5 Lakhs this year. In addition, it would be helpful to have the possibility to take deductions that are separate for medical expenditures and for health insurance premiums paid in the area of health insurance.
An increase in the PPF limit is yet another significant change that taxpayers would want to see implemented. Individuals are currently allowed to invest up to a total of ₹1.5 Lakhs throughout each fiscal year, and this limitation on one of the most popular investment options has not been updated in many years.
The ICAI has also recommended that costs connected to other insurance premiums be eligible for a deduction of their own. These charges include things like travel insurance, home insurance, personal accident insurance, and so on. Again, this is being done with the goal of persuading taxpayers to deposit funds into safety measures.
Regarding HRA, taxpayers benefit from an income tax deduction based on a set of regulations that differ depending on whether the taxpayer lives in a metro or non-metro city. The metro cities in question, however, were restricted to Chennai, Mumbai, New Delhi, and Kolkata. Given the soaring rents in these cities, analysts believe that the '50% of basic income + dearness allowance' guideline should be extended to other essential metro cities like Gurgaon, Ahmedabad, Bangalore and Hyderabad, among others.
Similarly, an increase in the Section 80GG rent ceiling to ₹10,000 should be explored, considering that rents in most Indian cities are already many times the present maximum of ₹5,000.
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