Union Budget 2023: While the year 2023 has actually simply started, the taxpayers, particularly individuals/ salaried class are pinning their hopes on the impending Union Budget to bring them some cheer on the individual tax front.

It is likely that the Government would be keen on providing a Budget which is expected to augment the economic growth of the country along with satisfy the taxpayers hopes, especially throughout the times when all the nations are recuperating from a global pandemic.The past Budgets have actually produced specific changes for the salaried class in regards to presenting brand-new tax routine and increase in standard reductions.

The probable wish list from the 2023 budget plan for private/ salaried class taxpayers are identified below: There is a desire that the Government may boost the annual fundamental exemption limit to Rs 5 lakhs from the existing Rs 2.5 lakhs in the forthcoming spending plan under both the old and new tax program.

The existing yearly standard exemption limit of Rs 2.5 Lakhs (under both the old and new tax regime) for individual taxpayers below 60 years of age has remained the very same from FY 2014-15.

This limit may be reviewed thinking about numerous elements like boost in cost of living, inflation, variety of taxpayers not required to file tax returns, tax revenue inevitable by the Government etc.The limitation for reduction under Section 80C of the Income Tax Act, 1961 (the Act) has actually been capped at Rs 1.5 lakhs since FY 2014-15.

Most of the reductions under Section 80C encourage taxpayers to invest in long-term savings, such as Public Provident Fund (PPF), National Pension System (NPS) and fixed deposits that offer long-lasting finance for infrastructure projects in the nation.

Taxpayers spend substantial amounts for home loan payment, Insurance for self and dependent and education for children.

It is a popular expectation that the reduction limitation might be increased from Rs 1.5 lakhs to Rs 3 lakhs.The tax-free medical reimbursements and travel allowance exemptions were withdrawn from FY 2018-19 by intro of basic deduction.

Since then, while the quantum of deduction has remained static, there is significant increase in medical expenditures and fuel costs.

Therefore, there is a case in point to think about increasing the standard deduction from the existing limit of Rs 50,000 to Rs 1 lakh.

Further, it may likewise be examined to offer the advantage of basic reduction to taxpayers opting for tax under the brand-new optional regime too, as these expenses are unavoidable for any salaried taxpayer.At present, the reduction for medical insurance premium is capped at Rs 25,000 consisting of preventive check-up for self, spouse and dependent kids, and Rs 50,000 for parents with a minimum of one of them being senior citizens.

Thinking about that there has been significant increase in hospitalization expenses and medical expense, these limitations perhaps enhanced to Rs 50,000 and Rs 1 lakh respectively.Child Education Allowance is presently exempt to the extent of Rs 100 and Rs 300 per child per month (approximately a maximum of 2 children) for children education and hostel expenditure respectively.

These amounts of exemption were repaired almost twenty years back.

There is a benefit in enhancing these exemption restricts to at least Rs 1,000 and Rs 3,000 per kid per month respectively, given the boost in cost of education in the recent times.Deduction for interest on real estate loan is presently at Rs 2 lakhs.

With the raise in the interest rates and reduction readily available for interest on housing being restricted to Rs 2 lakhs, the home loan buyers face a difficulty in regards to interest expenditures being non-tax deductible.

Bearing in mind the very same, this reduction can be increased from the existing limit of Rs 2 lakhs to Rs 5 lakhs.

Likewise, this deduction (interest on real estate loan on self-occupied home) is not enabled under the new tax program.

Thinking about that buying a home is a long-term monetary commitment it might be assessed to provide this deduction under the brand-new tax routine as well.Also Read|Union Budget 2023: Will hiking basic exemption limitation under brand-new tax routine advantage taxpayers? ExplainedWhile all the above proposals may be rewarding from a specific/ employed taxpayers point of view the impact they have on the finances of the Government especially the impact on direct tax collections would need to be thoroughly studied and examined before any of above is carried out.

(Parizad Sirwalla is Partner and Head, Global Mobility Services - Tax, KPMG in India.

Views are personal)