Five changes in income tax rules that the middle class seeks from FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman to present Interim Budget 2024 on February 1. Due to upcoming general elections in April-May, it’s interim. Expectations for income tax reforms, potentially including increases in tax exemption limits under sections like 80C and 80D.

1. Rebate in the Income Tax slabs

The middle class anticipates a revision in the income tax exemption limit from ₹2.5 lakh to ₹5 lakh. slab rates for individuals opting for the new income tax regime:

• No tax on income up to ₹3 lakh
• Income between ₹3–6 lakh taxed at 5%
• Income between ₹6–9 lakh taxed at 10%
• Income between ₹9–12 lakh taxed at 15%
• Income between ₹12–15 lakh taxed at 20%
• Income of ₹15 lakh and above taxed at 30%

2. Raise in SECTION 80C Limit

The existing ₹1.5 lakh limit for Section 80C investment deductions, unchanged for over a decade, must be raised to boost tax savings and investments. Delhi tax expert Ravinder Singh suggests increasing it to ₹2.50 lakh, noting inadequate adjustments for inflation.

3. Raise in standard deduction

Standard Deduction from salary of ₹40,000, later raised to ₹50,000 in 2019. With escalating medical and fuel costs, there’s a compelling argument to elevate the standard deduction to ₹1 lakh.

4. Relief for homebuyers

Ravinder Singh CEO OF Auriga Accounting suggested, “With overcrowding in Sections 80C, 80CCC, and 80CCD (1) and the growing demand for larger home loans, the finance minister should consider introducing a separate deduction for home loan repayments in the upcoming budget. Inspiration can be drawn from Section 80EEA, which introduced a separate deduction in 2019 for interest on home loans for first-time buyers.”

5. Increase in 80D deduction Limit

Ravinder Singh, Founder and CEO of Auriga Accounting, suggests raising the deduction limit under Section 80D for medical insurance premiums. He proposes increasing it from ₹25,000 to ₹50,000 for individuals and from ₹50,000 to ₹75,000 for senior citizens, aligning with the escalating healthcare expenses. Expanding Section 80D benefits to the new tax regime would enhance healthcare accessibility.