Budget 2024: Will Section 80C see a tweak? Single regime, breaks for homebuyers in taxpayers' wish-list

With Budget 2024 all set for July 23, taxpayers are actively voicing their desire for a simpler tax system. Their primary request is for a single tax regime, eliminating the current confusion between the old and new tax systems.

Additionally, taxpayers are advocating for an increased deduction limit under Section 80C, a popular tool for tax savings through investments and expenses. Homebuyers are also seeking relief, hoping for the return or expansion of tax breaks on home loan interest and principal repayments. These combined demands highlight a desire for a more streamlined and supportive tax system, emphasizing the power of their collective voice in shaping Budget 2024. Their influence could significantly ease the financial burden on those saving for long-term goals and aspiring homeowners, making them feel empowered and influential.

Shivam Shukla, a private sector employee, says, “The two tax regimes are a constant source of stress! Every year, figuring out which one will save me more money on taxes is a guessing game. In the past, things were simpler – deductions and investments were the way to go. Now, with these new choices, I cannot make decisions, and it's preventing me from making any investments at all, directly impacting my finances.”

While seeking insights from experts on the future of tax regimes, many believe the government will retain both. They anticipate that the government will monitor which regime gains more traction over time.

Prabhakar K.S., Founder and CEO of Shree Tax Chambers, suggests there may be changes under both the old tax regime and the new exemption-based regime. Since the financial year 2017-18, the tax rates for individual taxpayers have remained unchanged under the old regime. Prabhakar anticipates a potential revision of tax slabs and rates under both regimes, providing much-needed relief to the middle class, particularly salaried employees.

Harsh Shukla, an IT professional, urges the Modi government to increase the tax slab range and the deduction limits for the old tax regime, considering inflation. He also calls for an increase in the limits for certain tax-related sections like 80C.

Property and real estate prices have soared in most metro cities. Under Section 24(b) of the Income Tax Act, taxpayers can claim a maximum deduction of Rs 2 lakh for interest repayment on a home loan for a self-occupied property. Reddy suggests that rising property prices and higher interest payments on home loans warrant an increase in this deduction amount in the upcoming budget.

Archit Gupta, Founder and CEO of Cleartax, echoes this sentiment, advocating for an increase in the interest deduction limit under Section 24(b) from Rs 2 lakh to Rs 3 lakh. He believes this change would incentivize purchasing residential properties, supporting both individual financial health and the broader real estate market. Gupta also suggests reclassifying Bangalore as a metro city to align HRA deductions with other major cities, as the current non-metro classification limits HRA deductions to 40%, compared to 50% in metro cities.

Investors are also seeking favorable changes to capital gains taxes under the old tax regime, including potential adjustments to thresholds or rates. Prerna Gagerna, Sr. Account Director at Avian WE, calls for parity in tax rates across different entity forms and the taxation of capital assets like equity, debt, and immovable property. She points out that aligning and reducing these rates could simplify and promote fairness in the tax system.

Entrepreneurs and the self-employed are looking for more tax reliefs, including deductions for business expenses, home office costs, health insurance premiums, and retirement contributions. Shikhar Srivastava, Founder of Ascope Advertising, highlights the challenges they face, including balancing salaries, rent, and taxes, along with the constant pressure of monthly GST filing. He emphasizes that the complexity of the GST and tax regimes forces reliance on CAs, adding an extra financial burden to businesses, which is crucial for their survival.