Taxpayers desire tax deduction limit to double under 80C in Budget 2023: Survey
- In the upcoming budget which will be presented on February 1st, FM Nirmala Sitharaman is expected to announce new measures to bring down the budget deficit to below 5%, however, as per the survey, fiscal prudence was not a top priority for taxpayers.
One of the most expected tax sops in the upcoming budget 2023 will be the tax exemption limit under section 80C of the Income Tax. A survey carried out by a Mumbai-based financial planning start-up revealed that the majority of taxpayers expect to double the tax deduction amount under this section. The survey revealed that taxpayers were more interested in tax benefits than the country's budget deficit.
Financial planning start-up, Kuvera conducted a survey in the first week of January, where it gathered responses from at least 16 lakh users. The poll found that more than two out of three responders wished for a raise to the tax deduction limits under section 80C of the Income Tax Act.
Section 80C of the IT Act offers tax exemption to the tune of ₹1.5 lakh on various investments. This is among the oldest section and tax benefits are given to taxpayers. Some of the investment options that allow a ₹1.5 lakh tax deduction in 80C are -- public provident fund, national pension scheme, ULIPs, life insurance, pension plans, senior citizen saving schemes, national savings certificates, and fixed deposits among others.
Gaurav Rastogi, co-founder, of Kuvera said, "Responders said they would prefer if the limit use doubled from its current Rs1.5 lakh. The current limit hasn’t changed since 2014 and taxpayers are clearly expecting some relief from the upcoming budget."
Another significant expectation of taxpayers was making the scheme for switching from regular to direct of the same fund tax-free. Three out of every 10 responders voted for this change in the survey. Currently, the scheme is taxable.
In the upcoming budget which will be presented on February 1st, FM Nirmala Sitharaman is expected to announce new measures to bring down the budget deficit to below 5%, however, as per the survey, fiscal prudence was not a top priority for taxpayers.
The survey revealed that less than one in 10 said they wished for the finance minister to reduce the budget deficit to 5% or below.
Rastogi added, "According to our survey, taxpayers, at least among our user base, were more interested in tax sops than the country’s budget deficit. With the fear of recession looming large, it would be good to announce tax relief and encourage people to save more."
In his budget expectations note, Raj Khosla, Founder & MD, of MyMoneyMantra.com said, “as the Indian economy rebounds from the economic impact of the pandemic, it is expected that the government will prioritize job creation and expand the tax base by further simplifying the Goods and Services Tax (GST), and adjusting personal income tax rates to stimulate consumer spending.”
On the most-common and popular section 80C, Khosla said, "there has been no change in the 80C deduction for many years. The present limit of ₹1.5 lakh was set in Finance Act 2014. Given the inflationary trends, the above limit should be increased to ₹2.5 lakh."
Among other key tax benefits for salaried employees that is expected in this budget as per Khosla are --- the deduction for Health Insurance under Section 80D from ₹25,000 to ₹50,000; and the limit for Standard Deduction under section 16 to be increased from ₹50000 to ₹75000.
Further, Sumit Chanda, Founder, and CEO, of Jarvis Invest said, "Salaried workers are the main source of the country’s tax revenue and any changes in their taxation will have a significant impact on the economic recovery. There have been murmurs about the tax exemption limit being increased to 5 lakhs from the existing 2.5 lakhs. I would certainly look forward to it. It would mean higher disposable income which can lead to higher consumption and investments. This can definitely boost the economy."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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Business NewsBudgetBudget ExpectationsTaxpayers desire tax deduction limit to double under 80C in Budget 2023: Survey
First Published:17 Jan 2023, 04:11 PM IST
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