Budget 2024- What to expect on the personal taxation front-

Budget 2024: What to expect on the personal taxation front?

Union Budget 2024: Gita is your average software professional with a keen interest in following the daily trends of Indian economy to understand its impact – be it in the rise in prices of fruits or that of the stock market. She tends to connect the trends with RBI rates or FDI announcements. With upcoming year-end holidays, she is all geared up to appreciate the changes impacting her salary and plan for her new home in the next financial year.

Gita is not an exception to look up to the Budget. Given that General Elections are just a few months away, the Budget may not be a full-fledged one but she knows it will certainly not be a one pager!

Recently, RBI has enhanced UPI payment limits to INR 500,000 (five times higher than the existing one) for educational and health care purposes. At the same time, to sustain new home sales, the repo rates have remained unchanged.

Also Read: National Pension System: Tax benefits of investing in NPS

What could be?* Home Sweet Home

With the intention to provide an impetus to the real estate sector, RBI may maintain their stand of not changing the policy on repo rates. In addition, benefits such as increased deduction limit for interest on housing loan on self-occupied property from the existing INR 200,000 and enhanced set-off limit for loss from house property against other income (from existing INR 200,000 to INR 500,000) will support home buyers.

In case of purchase of house property, buyer from a resident seller faces an easy TDS mechanism while the buyer from a non-resident seller is required to obtain Tax Deduction Account Number, remit the deducted taxes using the TAN and file a withholding tax statement. This TDS compliance can be simplified at par with buyers from resident sellers.

* Work from home

Next, on the hybrid model of working, though the trace of pandemic is starting to disappear, India Inc. in many cases, is still implementing flexible/ hybrid work plans. An employee will necessarily have to create an office ergonomics, one that is not imitated, of course. Tax exemption either conditional or partial can be announced to meet such expenditure for purchase and maintenance.

* Ease of tax administration for NRIs

NRIs will have to remit taxes in advance or under self-assessment for income earned or received in India. In such cases, there may be challenges, if they do not have accounts with authorised banks in India for tax remittances. Therefore, it would be convenient if tax remittance from overseas bank accounts is enabled. Similarly, option to credit tax refunds to bank accounts overseas may also be considered.

* Small but not petty

Gita’s colleagues, staying in Bengaluru and Hyderabad, despite tussling with rising cost of living, are not treated at par with her colleagues in NCR, Mumbai, at least from the house rent allowance exemption perspective. While the Indian Constitution includes these cities as Metro, the Income-tax Act sadly, doesn’t. This Budget can provide to include Bengaluru, Hyderabad as metro cities so that residents therein can also claim exemption up to 50% of the eligible salary, instead of the current 40% limit.

The Budget wishlist is incomplete without the ask to raise the taxable income limit. As this would decrease the tax outflow, taxpayers can enjoy a higher take home pay, especially the salaried class who have limited tax saving options.

Needless to say, the interim budget being the sixth consecutive Budget of Hon’ble Finance Minister Smt. Nirmala Sitaraman, cannot have major schemes in order to adhere to the Election Commission’s Code of Conduct, but may factor simple janata-friendly measures to stay connected with the vote bank.

(By Nitin Baijal, Executive Director, Deloitte India, and Kavitha Jagadeesan, Senior Manager, Deloitte Haskins and Sells LLP. Views are personal)