Budget 2024 Expectations Income Tax: Budget 2024, which will be presented as an interim budget in February 2024, is eagerly awaited by salaried individuals, especially regarding potential changes in tax rebates. Among key demands, streamlining income tax rules and reducing complexities, especially in the new tax regime, is a constant plea.
Many hope for an increase in the rebate limit under the new tax regime from the current Rs. 7 lakh to Rs. 7.5 lakh or even Rs. 8 lakh. This would make taxable income up to that limit tax-free for individuals opting for the new regime.
Also Read: Budget 2024 Expectations: ‘Standard Deduction Should Be A Percentage Of Total Salary’
Here’s a summary of some key expectations and predictions:
Tax Burden Reduction
Uday Chawla, managing partner, Transearch India, said that in 2024, significant salary increases are being planned for employees by Indian companies, despite the global economic slowdown. An approximately 9.8% salary bump is expected for employees, building on the noteworthy 10% increase observed in 2023.
However, Chawla added that the optimistic outlook for salaried leaders is met with a challenge due to the high-income tax policies in India.
“Personal income tax, ranging from 5% to 37%, and additional charges contribute to a notable tax burden,” Chawla said.
Tax Structure Revamp
Chawla highlighted that in contrast, countries like Hong Kong (15%), Sri Lanka (18%), and Singapore (22%) feature more favourable tax systems, rendering them attractive for top-tier talent.
“As we now transition to remote working and the globalisation of businesses, there is a tangible threat that senior talent may be attracted to relocate to countries that offer the most efficient tax structures and a superior work-life quality and balance.”
Chawla added that as India strives to position itself as a global powerhouse, there is a recognised necessity for policies aimed at mitigating the tax burden on salaried employees, particularly senior leaders.
“The pressing requirement of the hour lies in the meticulous crafting of policies that transcend mere attraction, emphasising the importance of nurturing and retaining top-tier talent. This strategic approach stands as an indispensable element in fortifying the nation’s competitive edge on the global stage.”
According to ICRA Analytics, among other expectations, the following are urged;
- Raising the minimum pension amount under APY: The government may consider raising the pension floor for the unorganised sector workers under its flagship scheme, the Atal Pension Yojana (APY) as the current amount may not attract enough potential subscribers to enrol.
- Tax free status to annuity income from NPS: Senior citizens rely heavily on annuity income during retirement years. Considering the rise in medical expenses and the financial well-being of senior citizens, the government may accord tax-free status to annuity income from NPS. Also, an investment of Rs.50,000 a year is unlikely to yield much pension and the limit may be enhanced to Rs. 1 lakh.
- Separate tax deduction for life insurance premiums: A separate tax deduction for life insurance premiums instead of clubbing it under Section 80C will improve the penetration of insurance products in the country and encourage people to secure their family’s financial future by investing in life insurance. Also, the government may reconsider the 18% Goods and Services Tax charged on health insurance policies.
Readers must note that these are just expectations and predictions based on reports and expert opinions. The actual announcements will be made during the budget presentation on February 01, 2024.
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