Interim Budget 2024: Allow Deductions Under New Tax Regime To Increase Acceptance Among Salaried Class

Most Indian taxpayers have the habit of initially investing their savings in investment avenues that provide tax deductions under Section 80C .

New Delhi: As the upcoming Interim Budget 2024 is just a few days away, all eyes are glued to announcements from Finance Minister Nirmala Sitharaman in sectors such as personal finance, agriculture, banking, financial services, and insurance

Preeti Sharma, Partner, Tax & Regulatory Services, BDO India has said that the Finance Minister should focus on deductions for the salaried class under the New Tax Regime.

"The New Tax Regime provides favourable results for taxpayers up to an income level of Rs 7,50,000. To increase acceptance for NTR, the government should allow deductions under this regime, for say employee’s contribution to PF (under Section 80C) and employee’s contribution to NPS (under Section 80CCD). This would also promote the habit of building a retirement corpus for individuals," Sharma said.      

Further she argued, the presence of two regimes has also created complexity for the taxpayers. A clear transition plan to eventually move to one system of taxation is also warranted.

Navneet Ahluwalia, Head of Human Resources at FUJIFILM India said that the government must do either make the New Tax Regime more attractive for the salaried class by including a wider standard deduction scheme to incentivize individuals in the salary bracket of 7 to 30 lakhs or Increase the Standard Deduction and Benefits Under Section 80C because the limit of 1.5 lakhs is now a small amount compared to its revision 10 years ago.