Salaried individuals are the highest contributors to the Indian economy as they pay the highest percentage of tax in India. As per income tax returns filed in 2022, out of all the tax returns 50% of the forms are ITR 1, which has to be filed by salaried individuals. It is not only a significant contribution but also a growth driver of the economy.
Salaried individuals are the only ones who are responsibly paying taxes but not getting enough in quid pro quo. There are two primary reasons why salaried individuals are expecting an increase in tax deductions and slab rates in this union budget. If you are also a salaried employee, this article is for you.
Inflation is rising, the cost of living is high, and investment or insurance premium is also high, but tax saving is still the same since 2014.
Tech layoffs and salary cuts rate enough to make the year harsh for employees. It is reasonable to have expectations from the government to take a step ahead and show some financial empathy.
These are the two major reasons why you, as an employee, are focusing more on seeking tax relief from the government. There are a few areas of income tax in which you might be looking forward to getting relief in this union budget.
Deduction under section 80C
Since 2014, tax deductions for investing in mentioned schemes are available to salaried individuals, the limit hasn’t changed. It was first introduced in 2005 with a tax deduction limit of ₹1 lakhs and increased the same in 2014 to ₹1.5 lakhs. It’s been nearly a decade (9 years), and 2023 is the high time when an increase in deduction is made available to the most significant contributors to the country’s economy.
The incentives under section 80C are given for investing in government-related schemes like National Savings Certificates, Public Provident Funds, LIC, etc., giving a booster to the infrastructural development in the country.
Deductions under section 80D
Medical expenses are one of the expenses that have the highest percentage of inflation in the country. As per the data published by the Ministry of Statistics and Programme Implementation healthcare inflation in India went up by 7.21% in April 2022.
But the deduction available to the individual for medical expenses is ₹50,000 only. The union budget might increase such a deduction limit in the current union budget 2023
Allowances for children educations and hostel expenses
What do you think a child's education can cost you? More than ₹1,000 per month but allowances given by the government are ₹100 for child education and ₹300 for hostel expenses. In this union budget, the government might think rationally about the same and increase the allowances from ₹100 to ₹1000 for child education and hostel expenses from ₹300 to ₹3000.
The expectations of individuals for increasing the limit of deductions and allowances are unarguably right when countries do not have any sufficient support system regarding healthcare and education system, unlike other countries. The expenses of private hospitals and the education sector are skyrocketing as they contribute the highest proportion of your personal inflation rates.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com