5 Points Where Middle-Class Income Tax Payers Are Seeking Relief in This Budget

5 points where middle-class income tax payers are seeking relief in this budget

The newly formed government at the Centre under Prime Minister Narendra Modi is to present a full Budget for the fiscal year 2024-25 (April 2024 to March 2025) in mid July. The first budget of the Modi 3.0 is likely to lay down priorities in matters of taxation and policy as well as reform agenda of the government.

The middle-class income tax payers have high expectations from the government in the upcoming budget, including rebate in income tax slabs, increase in 80C limit among others. The limit of Public Provident Fund (PPF) has not been increased for over a decade now which is one of the most popular schemes under 80C falling under 'EEE' category'. There are many such demands by common man who is also facing high interest rate cycle due to rising benchmark rates.

Vinnaayak Mehta, Founder, The Infinity Group listed 5 points where the middle-class income tax payers are seeking relief in this budget:

1) Rebate in Income Tax Slabs: Middle-class taxpayers are seeking relief through an adjustment in income tax slabs, hoping the exemption limit will be raised from Rs 2.5 lakh to Rs 5 lakh. The recent changes made by the Finance Minister for the new tax regime, such as no tax on income up to Rs 3 lakh and different rates for higher incomes, are a step forward but more substantial relief is desired.

2) Increase in Section 80C Limit: Taxpayers are advocating for an increase in the Section 80C deduction limit, which currently stands at Rs 1.5 lakh. Given that this limit has not seen a significant update in over a decade, raising it to Rs 2.5 lakh would better align with inflation and promote greater savings and investments.

3) Raise in Standard Deduction: With rising costs of medical expenses and fuel, there is a strong push for increasing the standard deduction from Rs 50,000 to Rs 1 lakh. This adjustment would provide significant relief to salaried individuals by reducing their taxable income in light of current economic pressures.

4) Relief for Homebuyers: Homebuyers are increasingly seeking a separate deduction for home loan principal repayments, distinct from the already crowded Section 80C. Currently, Section 80C allows for a deduction of up to Rs 1.5 lakh for various expenditures, including life insurance premiums, tuition fees, provident fund contributions, and home loan principal repayments, which limits specific relief for borrowers. Given the rising costs of real estate and the need for larger home loans, a dedicated deduction would alleviate the financial burden on middle-class families, promote home ownership, and align with past initiatives like Section 80EEA, offering more targeted tax benefits and stimulating the housing market.

5) Increase in Section 80D Deduction Limit: The middle class is also seeking an increase in the deduction limit for medical insurance premiums under Section 80D. Raising the limit from Rs 25,000 to Rs 50,000 for individuals and from Rs 50,000 to Rs 75,000 for senior citizens would address rising healthcare costs and ensure better financial protection against medical emergencies.