Budget 2023: Expectations to Hike 80C Limit and Changes in Income Tax slab

The Union Budget for 2023 will be presented on February 1st, 2023 by Finance Minister Nirmala Sitharaman. Taxpayers anticipate a wide range of measures from the Budget this time around in light of rising inflation and high interest rates. Some of the top items on tax-payers’ wish lists this year include an increase in the basic income tax exemption limit, a higher deduction limit in section 80C, incentives for homebuyers, and a separate deduction section for life insurance.

This budget is noteworthy because it is the last fully-funded budget of the present government prior to the 2024 election, which could have a significant impact on the outcome of the vote. Whether or not the government has heeded the expectations and demands made is something we should wait and see.

“The presentation of the Union Budget for 2023–2024 comes at a critical time of geopolitical unpredictability, high inflation, and sluggish global economic growth. To maintain the current trajectory of steady economic growth, calculated steps to strengthen domestic sources of growth are essential “PHD Chamber of Commerce and Industry stated this.

According to Deepak Sood, Secretary General of ASSOCHAM, “increasing consumption by giving consumers more money is a low hanging fruit for a further recovery in economic growth.”

One expectation for the 2023 budget is the revision of the income tax slabs. There have been no changes since 2017–18. The analysis shows that 70% of respondents think changing some aspects of personal taxation will boost people’s quality of life.

The new tax system that was put into place in 2017 reduced taxes for taxpayers by 5%, but it also eliminated some deductions. It’s an interesting fact that the taxpayer can choose between the old and new taxes. When weighed against their drawbacks, the new tax rates are more advantageous for senior citizens.

The tax rate for an income of 2,50,000 rupees was 5%, and it increased to 30% for income over 15 lakhs. On income over Rs. 10 lakhs, the previous taxation system levied a 30% tax. Taxpayers anticipate that the tax slab will be increased in the upcoming budget, raising the threshold for the 30% tax rate from 10 lakhs to 20 lakhs.

Another budget prediction is the increase in the 80C limit. A variety of investments are eligible for deductions from taxable income up to a maximum of 1.5 lakh rupees per year under Section 80C of the Income Tax Act of 1961. The maximum tax deduction for a taxpayer is currently rupees 1.5 lakhs, but the public is clamouring for an increase to rupees 2.5 lakhs.