Budget 2024: Top 5 income tax benefits expected this year
What's the story
As the presentation of Budget 2024 on July 23 nears, Finance Minister Nirmala Sitharaman is expected to announce several income tax benefits. According to tax experts, adjustments to income tax slab rates are anticipated due to limited revisions in recent years. The government may also increase the standard deduction limit, bring enhanced tax benefits for home buyers, revise deduction limit for National Pension Scheme, and even increase deduction limit for medical insurance.
Rebate hike
New tax slabs and potential increase in tax rebate expected
One of the key expectations is an increase in the income tax exemption limit from ₹3 lakh to ₹5 lakh under the new tax regime, which would provide more disposable income for salaried and pensioned taxpayers. Another anticipated change in Budget 2024 is an increase in tax rebate. The previous year's budget introduced a full tax rebate up to ₹7 lakh under new regime. There are hopes that this may be raised to ₹7.5 lakh in the forthcoming budget.
Deduction increase
Standard deduction limit may see a rise
The standard deduction limit may also see an increase from its current level of ₹50,000 to as much as ₹1 lakh. This change would assist salaried individuals in dealing with escalating costs related to medical bills, fuel, vegetables, and other household groceries. Ashish Aggarwal, Director at Acube Ventures, suggested that "The current deduction of ₹50,000 could moderately increase to ₹60,000 or possibly ₹70,000."
Housing relief
Enhanced tax benefits for home buyers expected
The upcoming budget may also bring enhanced tax benefits for home buyers. The overall limit to claim loss under income from house property could be increased from ₹2 lakh p.a. to ₹3 lakh p.a., further supporting the 'housing for all' initiative. Abhishek Jain, a partner at Kailash Chand Jain & Co., emphasized the need for increased House Rent Allowance exemptions to counteract rising rental expenses. The long-term capital gains exemption limit may be increased from ₹1 lakh to ₹2 lakh.
Pension reforms
Anticipated changes to the National Pension System
Significant changes to the National Pension System (NPS) are also expected, such as raising the additional income tax deduction limit under Sec 80CCD 1B. This proposed reform is seen as a crucial step toward enhancing retirement savings and providing financial security for pensioners. There is also a demand to increase the tax-free withdrawal limit upon maturity The upcoming budget is viewed as an opportunity for the government to set a positive tone for economic growth through policy announcements.
Healthcare relief
Expected increase in deduction limit for medical insurance
In light of rising healthcare costs, there's an expectation for an increase in the deduction limit for medical insurance premiums under section 80D of the Income Tax Act of 1961. The current limits of ₹25,000 for individuals and ₹50,000 for senior citizens may be raised to ₹50,000 for individuals and ₹75,000 for senior citizens. This potential change could provide significant relief to taxpayers grappling with escalating healthcare expenses.