The Union Budget 2024, which will be delivered on February 1, 2024 by our Honorable Finance Minister, Ms. Nirmala Sitharaman - her sixth year in this capacity - is just a few days away.
Let's examine some of the most important income tax projections for personal tax from Budget 2024:
1. Raising the Baseline Exemption Threshold
Budget 2023 saw a number of changes from the government, although it is anticipated that both regimes will see an increase in the basic exemption ceiling of at least Rs 50,000.
Raising the basic exemption threshold will boost net take-home since it will lower tax obligations for all taxpayers.
2. Allowance of Parity in the Deduction for National Pension System Contributions
As of right now, an employee may deduct all of their contributions made to a registered pension plan throughout the fiscal year, provided that they do not exceed:
• 14% of pay, in cases where employees of the federal or state governments contribute this amount.
• 10% of pay, if there are additional staff
This leads to inequality between workers in the public and private sectors. Therefore, it is anticipated that, similar to government sector employees, private sector employees should likewise be permitted to deduct up to 14% of their salaries.
3. An Increase in the Standard Deduction
A salaried taxpayer is entitled to a standard deduction of Rs 50,000 under the current Income Tax rule, which applies to both the old and simplified tax regimes. It is anticipated that the government will take into consideration raising the standard deduction for salaried personnel from Rs 50,000 to Rs 1,000,000 in light of the rising expense of living.
4. Hyderabad, Pune, and Bengaluru will be regarded as metropolises for the purposes of Section 10's exemption from house rent allowance (HRA)
For the purposes of section 10(13A) of the Income Tax rules, only Delhi, Mumbai, Chennai, and Kolkata are deemed to be metro cities. 50% of the base pay is one of the requirements to calculate the HRA exemption for the metro areas mentioned above.
Many people find work in Bengaluru, Hyderabad, and Pune, three of the cities with the quickest rates of growth. In addition, living expenses in these cities are rising. Thus, it is recommended that Bengaluru, Hyderabad, and Pune be included in the list of metro cities in order to allow employees to receive a deduction that is comparable to the metro cities mentioned above; that is, one of the requirements for calculating the HRA exemption should be 50% of basic salary rather than 40% of basic salary based on current provisions.
5. Make it easier for buyers of homes when the seller is an NRI to comply with TDS
As per the existing regulations, in the event that a resident home seller owns a property valued at Rs 50 lakhs or more, they are required to deposit 1% of the purchase value as TDS with the government. If the vendor is a Non-Resident Indian (NRI), there are additional complicated criteria for depositing tax. In the event that the seller is an NRI, the buyer must additionally obtain a TAN, deposit the tax, and complete e-TDS returns in addition to the straightforward and quick TDS process. In the case of a resident seller, the tax is deducted at a higher rate. Therefore, it is advised to implement a straightforward TDS procedure that is comparable to a resident seller's.
