Budget 2023: Pre-budget expectations for salaried individuals on tax relief

Sousthav Chakrabarthy, Co-Founder & CEO, Siply

The increasing cost of living, rising inflation and the lingering effect of the global pandemic has impacted the middle class and the lower middle class the hardest and savings have taken a hit. Indians are feeling the pinch and putting lesser and lesser amounts in the piggy bank, and this is a huge cause of concern for the Indian economy. We expect the Budget 2023-24 to address this situation by providing some tax relief to the salaried class, bringing down the cost of goods and essential services to control inflation and increasing the limit under Section 80C. Overall, the upcoming budget should be geared towards creating a savings and an investment-oriented economy.

Additionally, while the Indian government has taken several measures to give startups the impetus to grow, further measures are needed. For one, we expect an increase in the angel investor pool at the seed stage and a tax relief on Angel tax which wipes away a significant part of the surplus that startups need for their growth.

Mr.Sanchit Malik, co-founder & CEO, Pazcare

80c limit in India has been constant for many years. Considering inflation and all the other factors, we believe the increase in 80c limit for tax saving and wealth creation will be a great relief for salaried employees. We are hoping that the 18% GST on Health Insurance and Term Plan premiums would be reduced to a minimum of 5% in the coming year, which will benefit both corporates and individuals and enhance penetration. The tax break on home, travel and personal insurance premiums that will be suggested will encourage people to protect their assets and purchase personal accident insurance, which will then offer financial protection and shield the policyholder from any financial losses that may occur as a result of unforeseeable events.

Ankit Agarwal, Founder & CEO, InsuranceDekho

India is amongst the least insured nations globally despite having 57 insurance companies. As we approach the Union Budget 2023-24, we expect the government to increase the tax deduction limit under section 80C which currently stands at Rs. 1,50,000 or carve out a separate exemption category for life insurance premium. Besides, there should be a higher deduction limit for health insurance premium under Section 80D, which is currently limited to 75,000.

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Higher insurance penetration not only reduces the overall financial risk in the system but also enables crucial development capital available to the economy. Government should reduce the GST on insurance premium from 18% to 5% or make it nil completely. Making insurance products affordable will increase the demand and accelerate its penetration in the country.

In India, majority insurance gets retailed through intermediaries, especially individual insurance agents. To offer much-needed momentum to these agents, the tax deducted at source (TDS) exemption limit on insurance commission (under section 194 D of the Income Tax Act) should be increased from the current level of 15,000 to a higher amount. This will leave higher cash in hand of these insurance agents, who are rightly the lifeline of the Indian insurance industry.

Jyoti Bhandari, Founder and CEO Lovak Capital

As stated by our finance minister recently that focus on middle class and boosting consumption, salaried class is expecting for exemptions in tax slabs and increasing their take home income by

a) Increasing the minimum tax slab from Rs. 2.5 Lacs to 5 Lacs

b) Increasing school’s fee slab for exemption

c) Increasing limits for 80C

d) Health care incentives for lower salaried people

e) Monetary policy measures to boost savings

Government’s focus is on managing macroeconomic stability and moderate monetary policy to control inflation and boost growth.

Mr Ashwin Chawwla, Founder & Managing Director, Escrowpay

The pandemic has had a negative influence on the nation’s economy, especially the salaried class. While many paid employees had to take pay cutbacks during this pandemic era, a sizable number of employees also lost their employment. The working economy hopes that this year’s budget would bring them rewards.

These are the some expectation from the budget:

– Increase basic limit to 5 lakh.

– Medical reimbursements increased to 100,000 from 50,000.

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– Health insurance benefit increased to 50,000 from 25000.

– Housing loan interest increased to 500,000 from 200,000

Mrs. Shweta Tanwar Mukherjee, Entrepreneur & Founder – Sociallknot

Taxes are paid most honestly by the salaried class, thus they should receive the greatest advantages. The anticipation among salaried people for the upcoming Union Budget proposals in terms of tax reliefs – decrease of tax rates/extension of tax slabs, increase in deductions, simplification of compliance procedures, etc. – grows with each passing year. The general elections are only a year away, so expectations may be higher this year than they would be in any other year. In previous year,  tax rate reductions have given India Inc. the much-needed boost. Because of the rate cuts, the government’s tax base has expanded, increasing its ability to collect direct taxes. In contrast to the foregoing, a salaried person is subject to taxation at rates as high as 42.74%. The disparity between tax rates is substantial, and aligning individual tax rates/slabs in the 2018 budget would promote consumption in a much-needed way, stimulating economic growth.

We have outlined ideas that could be used to implement such changes:

1. Increasing the Section 80C deduction threshold: The Income-tax Act of 1961’s Section 80C allows for deductions of up to INR 150,000 for contributions to provident funds, equity-linked savings plans, and life insurance premiums. This limitation was most recently changed by the Finance Act of 2014. The Cost Inflation Index (CII), which is used in income tax to calculate capital gains, was 254 for the tax year 2015–16 and 331 for the tax year 2022–23 to give some context.

2. Standard deduction to be increased: Salaried employees are now permitted a standard deduction of INR 50,000 to cover costs spent while working. This is in place of the countless costs that employees spend while working that they are unable to deduct.

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3. Interest on loans secured by real estate is deductible.

The finance ministry should increase the deduction limit for interest payments on housing loans to at least INR 400,000 in the forthcoming Union Budget to help offset increased interest charges. This would indirectly lower the cost of purchasing a home and should assist increase demand in the real estate sector.

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