Budget 2023: 5 such rules of income tax, which are expected to change

1) Changes in section 80C

Under the Income Tax Act, income tax payers take maximum advantage of this rule to save tax. Things like PPF/EPF, life insurance, NSC, ASY, tuition fees, home loan principal etc come under section 80C. From 2014, the maximum limit of exemption in this is Rs 1.5 lakh. However, the scope of this rule is very wide. It is expected that the government can now increase it to Rs 2 lakh or Rs 2.5 lakh. Some experts even suggest that in view of the difficulties of the middle classes, it should be increased to Rs 3 lakh annually. According to a report in Financial Express, Abhishek Soni, CEO and co-founder of Tax2Win, says that increasing the minimum exemption limit under section 80C to Rs 2.5 lakh will encourage people to adopt more tax-saving options. This will also provide relief from inflation.

2) Changes in the basic exemption limit in income tax

Many tax experts suggest that the government should increase the basic exemption limit in income tax under the Income Tax Act to Rs 5 lakh for all. At present, basic exemption is applicable only on income up to Rs 2.5 lakh. Means people whose income is up to Rs 2.5 lakh, they do not have to pay any income tax. There is a demand to increase this limit to Rs 5 lakh. There has been no change in this limit of basic income tax since the financial year 2014-15. Puneet Maheshwari, Director, Upstox, has said, “To put more money in the hands of the people, the government has decided to abolish tax on dividend payments, reduce the tax bracket for investors and increase the basic tax exemption level from 2.5 lakh to 5 lakh.” Lakh or more should also be considered. On the other hand, Soni says that by increasing the basic exemption limit on income tax, people will have more money, their investment capacity will increase and this will also help in economic development.

3) Consideration of increasing the limit of section 80D

According to health experts, health services have become more expensive since the beginning of the pandemic. Therefore, many experts believe that the government should give more exemption under section 80D to further increase the premium payment limit for health insurance. At present, relief under this rule is available only up to Rs 25,000. Taking exemption in this will help people to take such a policy for health insurance, in which the costliest treatment can be possible with the amount of health insurance.

4) Expectation of increase in exemption on home loan

Many experts are expecting that in the coming budget, the Finance Minister will announce more exemption in interest relief for income tax payers taking home loans. At present, the exemption on maximum interest payment on home loan is fixed up to Rs 2 lakh. Whereas, property prices have increased across the country and inflation is also increasing at 6%-7%. Soni says that the exemption limit on home loan interest should be at least Rs 3 lakh, irrespective of the cost of the property.

Read this also- If you also want to save your income tax, then follow these easy methods, you will get great benefits

5) Relief in Long Term Capital Gains Tax

Some industry experts suggest that the government should consider providing long-term capital gains tax relief to retail mutual funds and stock investors as well. As Maheshwari says it would be beneficial to remove it on equity. Currently, capital gains above Rs 1 lakh in a financial year are taxed at 10%.