Budget 2023: Wage earners expect an increase in income tax limit after 3 years of Covid

Ahead of 2024 General Elections, the common people's hopes are high on Budget 2023. Especially the wage earners, who have faced the hardships of Corona for the last three years, are eagerly waiting for some relief regarding income tax. They are hoping that Finance Minister Nirmala Sitharaman will announce some incentives on February 1.

Hyderabad: For the last several years, there has been no relief to the salaried class in income tax limit. As of now, the taxable income is limited to Rs 5 lakhs but this is also being given subject to certain conditions. Against this backdrop, these sections are expecting the government to increase the income tax limit up to Rs 5 lakh and implement it without any riders.

A person with a taxable income of Rs 10 lakh would have paid a tax of Rs 1,33,900 in 2013-'14. The tax amount for the financial year 2022-23 is Rs.1,17,000. If we compare and adjust the current price inflation index, the tax payable in the current financial year should be Rs 88,997. That means Rs 28,003 should be less. As such, there is a need to raise the tax threshold to keep pace with rising inflation.

Tax slabs

Besides increasing the income tax threshold, there is a need to increase the 20 and 30 percent slabs of the old tax system. A tax of 20 percent above Rs 10 lakhs and 30 percent slab above Rs 15 lakhs is required. Only then, the surplus of the tax payers will increase in line with rising prices.

Section 80C

The main section to reduce the tax burden is Section 80C. As part of this, they are providing an opportunity to invest up to Rs 1,50,000 in various schemes. The EPF, VPF, PPF, life insurance, home equity, ELSS, tax saving FDs, children's tuition fees and many more are part of this. It has not changed since 2014. A lot has changed since then.

Reports say that there has been a 25 percent increase in people's purchasing power. Inflation is also high. According to the calculations of 2014, Rs 1.50 lakhs is enough. But, now it would be good if the exemption limit is increased to at least Rs 2 lakh. Section 80CCD (1B) limit should also be increased to Rs. one lakh and above.

Term insurance policies

People are realizing the need for term insurance policies. There is a need to provide a special section to encourage them more. There are two separate sections for home loan principal and interest amount. The RBI hiked repo rate by 225 basis points. This has made home loans expensive. Keeping this in mind, a single section should be set up for principal and interest payments, and exemption should be provided up to Rs 5 lakhs. This is encouraging for those who want to fulfil their dream of owning a home.

Reduce GST

Along with the policyholders, the industry wants to reduce GST on health insurance and term life insurance policies. They want to bring it from 18 percent to 5 percent.