Jigar M. Patel
International Tax Attorney
Taxpayers are anticipating some much needed tax breaks on July 23, 2024 from Finance Minister Nirmala Sitharaman, when she rises to present her seventh budget in a row (after 5 regular and 1 interim from 2019 to 2024), surpassing the earlier record of six straight budgets set by Morarji Desai, almost 5 decades ago. Let us take a look at some proposals that can indeed bring a smile on the face of individual taxpayers.
Raise Standard Deduction for Salaried Taxpayers to Rs. 1 lakh
Salaried class dominates the number of individual taxpayers in India. Though it contributes a significant chunk to the personal tax revenues, it sadly gets ignored, more often than not. Currently, standard deduction is the only important tax relief available to the salaried.
Considering the increased cost of living and the fact that under the new tax regime, the salaried have been deprived of several exemptions and deductions, such as allowances for house rent, leave travel, transport, uniform and medical reimbursement, the need of the hour is to raise the present limit of standard deduction of Rs. 50,000 to Rs. 1 lakh.
Need to Revive Focus on Housing, Healthcare & Education
Rationalisation of tax rates under the new tax regime introduced by Budget 2020, was indeed a welcome measure, but the same came to be offered carrying a major sacrifice, robbing taxpayers of meaningful incentives for housing, healthcare and education earlier enjoyed by them.
Little did the bureacrats in the North Block of the Parliament realise that tax incentive for housing loan was not just an individual tax relief, but was in fact a major booster dose for the development of the real estate sector, which significantly contributes to all round economic growth.
Every taxpayer, who pays an extra 4% on the applicable tax on his income, by way of Health and Education Cess, often wonders what he gets in return for maintaining decent healthcare of his own family and for pursuing quality education of his children.
Adequate coverage of medical insurance is a mandatory must, in the absence of which a middle class family would virtually not be able to survive. While costs for children’s education keeps on mounting, exemption for children’s education allowance of Rs. 100 per month per child is a cruel mockery of the taxpayer. Deduction for children’s tuition fees or interest paid on education loan is most unfortunately no longer granted to a taxpayer opting for the new tax regime.
While the philosophy of lower taxes with fewer deductions does carry its own merits, it is high time to revive focus on housing,healthcare and education and offer purposeful tax reliefs.
Senior Citizens deserve a lot more from the FM
Inspite of having paid decent taxes all his life, when his earnings deplete, an Indian Senior Citizen does not enjoy any privilege of receiving social security. The new tax regime has virtually deprived Seniors of their earlier beneficial tax status. Instead of such puny reliefs granted in the Amrat Kaal Budget, as freedom from filing ITRs (but attached with highly impractical conditions), Seniors deserve some meaningful and tangible tax reliefs from the FM.
