Budget 2023 income tax wish list: Lower rates, deduction hike, higher 80C exemption; here's what experts want

Finance Minister Nirmala Sitharaman will present the Union Budget 2023 in the Lok Sabha on 1 February. While the nation is waiting with bated breath to hear what the Finance Minister has to say, policy experts have been coming up with lists of possible amendments to the tax structure that the government could make. According to reports, many experts want tax relief announcements in the Budget 2023 for leaving more disposable income in the hands of the taxpayers. This will cause an increase in spending, leading to our economy’s growth. Here are some of the expectations from the Union Budget 2023: Increase standard deduction limit Under the old tax regime, a deduction of Rs 50,000 is offered to all the salaried employees. According to experts, the deduction limit needs to be raised to factor in the increasing cost of living. Aarti Raote, Partner, Deloitte India, told Moneycontrol, “Given the rising inflation, the taxpayers are certainly expecting some relief there.” People are hoping that the government extends the limits and also makes some changes in the new tax regime. Tax slab rejig The lowest personal income tax slab is at 5 percent, while the highest stands at 42.74 percent, including surcharge and cess. The 42.74 percent tax rate is among the highest globally. The maximum personal I-T rate is 15 percent in Hong Kong, while it is 18 percent in Sri Lanka, 25 percent in Bangladesh, and 22 percent in Singapore. The income tax slabs haven’t been changed since Budget 2016-17 except for the concessional income tax regime’s introduction some years ago. Under the present regime, the highest tax slab is 30 percent for people earning an income which exceeds Rs 10 lakh. Experts believe that a reduction in the income-tax rates is required. They want the Budget 2023 to reduce the highest slab rate to 25 percent. Raise 80c exemption The exemptions under Section 80C are availed by the salaried individuals for reducing their taxable income by Rs 1.5 lakh in a financial year. In a Pre-Budget Memorandum, the Institute of Chartered Accountants of India (ICAI) stated that the Budget 2023 should increase the exemption limit to Rs 2.5 lakh. As per experts, a rise in deductions and exemptions drives retirement savings. The Section 80C exemptions can be availed against these investment options:

• Public Provident Fund (PPF)
• Life Insurance Corporation (LIC) premiums
• National Saving Certificate (NSC)
• Employers Provident Fund (EPF)
• Five-year term deposit with banks
• Equity Linked Savings Scheme (ELS)
• Unit Linked Insurance Premiums (ULIP)

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