Budget 2023: Sops like standard deduction hike, section 80C limit raise on the cards
In Budget 2023, there may be perks that will help a wider segment of the middle class. Experts believe that the last full Budget could benefit the sector as it battles with price increases and job losses, buoyed by the recent comments of finance minister Nirmala Sitharaman that she too is a member of the middle class and understands the problems experienced by them.
According to insiders, the finance ministry is reviewing ideas from various government ministries regarding specific actions that could be disclosed in the Budget and would likely benefit a sizable portion of the middle class.
The government has not increased the Rs 2.5 lakh income tax exemption threshold that was set in 2014 by the first Budget of the then-Finance Minister, Arun Jaitley.
Additionally, the standard deduction has not changed from 2019 to Rs 50,000. According to several analysts, in order to adequately compensate the salaried middle class for the high level of inflation, both the exemption limit and standard deduction need to be raised.
The minister further emphasised that no new taxes on the middle class had been levied by the current Modi administration.
She claimed that the government has taken a number of steps to increase comfort of living, including creating 100 smart cities and expanding the metro train network in 27 cities.
The minister assured that because the middle class's population is expanding and is now sizable, the government can do more for it.
"I can easily identify with their issues. The government continues to provide for them in a big way, "She spoke without committing herself.
The finance ministry is also considering the prospect of raising the cap under 80C, which encompasses investments in things like life insurance, FDs, bonds, housing, and PPF, among other things.
According to sources, the government may streamline capital gains tax laws to benefit middle class investors who have begun participating in capital markets. Payment for medical insurance premiums is also being considered, they added.
The insurance sector has advocated for bigger tax deductions for health insurance premiums as well as a separate tax deduction for life insurance and annuity income.
According to Max Life Insurance MD and CEO Prashant Tripathy, an increase in the limit under 80C with a special focus on the insurance sector will help push term insurance or other protection plans, which can provide crucial financial protection to the family in the event of an untimely death of the earning member.
(With input from PTI)
