As the interim budget approaches on February 1, the expectations from various sectors and individual taxpayers are nuanced and revolve around specific areas of financial concern. Here’s a detailed examination of the key expectations:
1. Higher Basic Exemption Limit:
Current Scenario: The tax rebate limit was elevated from Rs 5 lakh to Rs 7 lakh in the new tax regime last year. However, there’s a call for a more extensive revision in the basic exemption limit under both the old and new tax regimes.
Rationale: Unlike the tax rebate, which applies to specific income brackets, an increase in the basic exemption limit would have a broader impact, reducing the tax liability for all taxpayers across various income slabs.
Expectation: Stakeholders are urging for an additional increase of Rs 50,000 to the basic exemption limit to account for inflation and to provide relief to taxpayers.
2. Enhanced Deductions on Medical Expenses:
Current Scenario: Deductions for health insurance premiums under Section 80D are capped at Rs 25,000 annually for self and family, with an additional Rs 50,000 for senior citizens. Deductions under Sections 80DD and 80DDB for specific medical expenses also have predefined limits.
Rationale: The rising costs of healthcare have prompted a plea for an adjustment in deduction limits to make them more in line with current healthcare realities.
Expectation: Taxpayers are anticipating an increase in deduction limits for health insurance premiums and medical expenses. Additionally, there’s a call to extend the Section 80D deduction to the new tax regime, recognizing the unavoidable nature of healthcare expenses.
3. Comprehensive Review of Medical Expense Deductions:
Current Scenario: Sections 80DD and 80DDB cater to deductions related to medical expenses for disabled dependents and specified diseases or ailments, respectively. However, the existing limits are considered outdated.
Rationale: Medical inflation has significantly altered the cost landscape, necessitating a reevaluation of deduction limits to ensure they align with current healthcare realities.
Expectation: Stakeholders are urging the government to revisit and potentially raise the Rs 40,000 deduction limit under Section 80DDB, especially for individuals below 60 years of age.
In summary, the expectations for Budget 2024 delve into specific areas such as tax exemption limits and healthcare-related deductions. The nuanced requests reflect a desire for the budget to address evolving economic dynamics and cater to the diverse financial needs of individual taxpayers and sectors.
Credit: Money Control