Salaried employees’ expectations from Budget 2023: Will there be a big bang change in Budget 20223 for salaried class? Here’s what is expected
Budget 2023 expectations of salaried employees – Here’s what to expect. Representational image
Salaried employees’ expectations from Budget 2023: Salaried employees are the biggest contributors to tax in India yet they receive very few tax exemptions. They now have big expectations from Budget 2023, which will be presented on February 1, 2022. However, some experts believe that it may not be a populist budget.
According to Sumit Mangal, Partner, Luthra and Luthra Law Offices India, salaried employees can expect rationalisation of income tax slab rates, both in terms of limits and tax rates. “Increase in limit of the standard deduction, either as a fixed increase or introduction of the progressive standard deduction based on total salary can also be expected from Budget 2023,” he said.
“Budget 2023-24, being the last Union Budget of the Modi government before the 2024 polls, we can expect it to be taxpayer-friendly focusing on benefits that could be provided to a taxpayer. However, keeping in mind that the Indian economy has started to recover from the scars of the outburst of Covid-19 pandemic fiscally, the government will fully ensure to align its goal of preparing a budget that boosts economic growth in conjunction with thrust on expectations of taxpayers,” said Maneet Pal Singh, Partner, I.P. Pasricha & Co.
According to experts following are the top expectations of salaried employees from the Budget 2023:
Increase in HRA
Increase in Housing Rent Allowance to adjust to the work-from-home culture and increased rentals post-COVID.
Change in New Tax Regime
Change in the special tax regime to make it more attractive for salaried taxpayers as currently there are not too many takers.
Increase in Section 80C limit
An increase in the limit for section 80C deduction (currently capped at Rs. 150,000) is expected, in view of high inflation and to encourage personal savings and investments, said Mangal. The last increase in this limit was about a decade back.
“Deduction based on tax saving investments u/s 80C of the Income Tax Act,1961 has seen no increase since Financial Year 2014-15 of Rs.1,50,000. It is expected that the same will be established at Rs.2,50,000 respectively. It will help the salaried class promulgate their investments simultaneously reducing their tax liability and thereby enjoying the lowest tax slab,” said Singh.
Tax incentives for salaried class
Salaried employees can expect that the Budget 2023 will incentivize them as no significant benefits were there for them in the previous year’s budget. Experts expect that the standard deduction of Rs.50,000 should be enhanced to a reasonable limit of Rs 80,000 as it will help middle-class employees in terms of reduction in their tax liability.
Work from Home Allowance
In the wake of the Covid-19 pandemic, many companies resorted to a “Work From Home” structure. Unlike traditional work patterns, this approach has limitations and has had a significant impact on employees.
“Several expenses, for example, electricity expenses, and internet expenses which were earlier borne by the employer are now to be expended by employees pocket. Considering this situation, even if the employer tends to provide allowance to employees in this respect, the same is taxable in the hands of the employee under the head “Salaries”. This budget is expected to bring ‘Work from Home allowance’ to rationalize and bring tax benefit to the salaried class,” said Singh.
Increase in Basic Exemption Limit
Experts are expecting that the basic exemption limit of Rs 2,50,000 in the case of resident individuals aged less than 60 years should be enhanced, which will give relief and reduce the tax burden on the salaried class in less pay scale.