As all of us eagerly anticipate the interim Union Budget 2024-25, scheduled for February 1, 2024, the conversations are a blend of curiosity and speculation.
“What will happen in the budget?” will be one of the most asked questions in the upcoming days.
As this is the interim budget, it is likely that the scope will of this budget will be limited. But, at the same time as the general elections draw near, the central government might make some big announcements to appeal to the voters.
While there might not be many major changes in Income Tax, here are a few things we are expecting from the budget:
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Update on NPS (National Pension Scheme): The government is expected to provide a status report on NPS, possibly addressing questions from the NPS vs OPS debate last year. There might also be an extension of NPS benefits to the new tax regime.
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Increase in 80D deduction limits: With rising healthcare costs, there is a possibility of enhancing the ₹25,000 deduction limit under section 80D to ₹50,000 to align with inflation.
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Simplifying taxes on capital gains: The government may introduce measures to simplify the complex provisions of capital gains taxation in the interim budget. This could ease compliance for taxpayers and potentially encourage more individuals to report their capital gains.
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Revising 80C deduction limit: Some experts also believe that the 80C deduction limit needs revision and should be increased to ₹2L. The current limit is ₹1.5L. However, considering the government’s promotion of the new tax regime, raising the 80C limit might contradict this approach, as it could make the old regime more advantageous.
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Increase in Standard Deduction: This was anticipated in the last budget as well. While the deduction amount was not increased, it was, however, introduced in the new regime. This year, the government might increase the limit under the new regime, to further make it more favourable.
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Taxation of ESOPs: The Centre could make the taxation on ESOPs easier. If there’s a more straightforward approach towards ESOPs in terms of taxation, more companies would prefer to make it a part of their employee benefits plan. This would also act as a catalyst in promoting start-ups all over India.
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Simplifying tax compliance for start-ups: Experts say that the current regulatory, taxation and compliance burden is very complex for start-ups which are small in terms of revenue or scale of operations. A separate simplified tax regime for start-ups which further reduces this burden can be considered; experts believe that this can be done through procedural tweaks in the start-up policy.
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NPS limit can be hiked from 10% to 12%: The Pension Fund Regulatory and Development Authority (PFRDA) chairman Deepak Mohanty, said that employer’s contribution to NPS up to 12% must be exempt from taxes. The current limit is capped at 10%. This change would actually bring the limit at par with the EPF limit and further promote investing in pension schemes among individuals.
What are your thoughts on the upcoming budget? Let us know some of your expectations below!