By Surabhi Marwah
budget 2024: In view of the upcoming general elections, it is expected that the budget coming in February 2024 ‘may be’vote on account‘, The full budget is expected in July 2024. Although the government had given tax benefits in the interim budget in 2019, this time no major tax reforms or amendments can be expected, similar to the last interim budget in 2009. and 2014, where no major changes were announced. Having said that, below is the wish list that can be considered from a personal tax perspective:
1. A more beneficial Concessional Tax Regime (CTR) – It is recommended that some changes be made to the CTR to make it more attractive taxpayers Such as availability of certain deductions like interest on home loan for self-occupied property, retirement contributions (PF, PPF, NPS), insurance premium etc. Further, taxpayers should be allowed to opt for CTR in amended and delayed tax returns. Well. Also, the frequency of switching between tax regimes may be increased for individual taxpayers having income from business or profession
2. Increase in standard deduction , In view of the increase in cost of living for individuals and the fact that salaried taxpayers cannot claim deduction for expenses incurred by them, the government is considering increasing the standard deduction from the existing limit of Rs 50,000 to Rs 1,00,000. Can do.
3. Tax Free Gift Limit – Currently, gifts received from non-relatives are tax free only if the aggregate value of such gifts is up to Rs 50,000 during a financial year. If the total value of gifts received in a financial year exceeds Rs 50,000, the total value of gifts is taxable. The limit of Rs 50,000 is in effect from 1 April 2006, and hence, this limit can now be expected to increase to Rs 1,00,000.

4. Deferral of tax payment on Employee Stock Option Plan (ESOP) benefits for all employers – ESOPs are taxed as salary perquisites at the time of allotment of shares (on exercise of shares by employees). Given the absence of liquidity for unlisted companies, it becomes extremely difficult for employees to arrange funds to pay the exercise price as well as tax on such allotment of shares under ESOPs.
At present, for certain eligible start-ups covered under Section 80-IAC, exemption is given in terms of deferment of such taxes till the stage of sale of shares by the employees as compared to the stage of allotment of shares to the employees. Income tax Act, 1961 (ITA). If the government considers extending the benefit of deferment of taxes to all employers then it will be beneficial for salaried taxpayers.
5. Rationalization of capital gains – Currently, there are several tax rates and holding periods to determine the taxability of capital gains. One might hope that the holding period could be standardized across different asset classes. Additionally, the existing limit of non-taxability of up to Rs 1,00,000 on long-term capital gains from sale of equity shares and equity oriented mutual funds may be increased to Rs 2,00,000.
Additionally, as per section 50CA of the Act, currently, where shares are transferred at a price lower than the fair market value (FMV), capital gains are calculated by considering the FMV as the sale consideration rather than the actual sale consideration. Is. In case of immovable property, exemption is available and if the stamp duty value is less than 110% of the actual sale consideration, the capital gain is calculated using the actual sale consideration and not the stamp duty value. However, no such limit or exemption is available for unlisted shares. A similar cap for standard taxation may be introduced for unlisted shares also.
6. Changes in deductions/exemptions for accommodation – The limit of deduction available for interest paid on housing loan for self-occupied property is Rs 2,00,000 from the financial year 2014-15. While additional deductions for interest paid on home loans were later introduced for first-time home buyers, there was no change in the deductions available to other taxpayers. Therefore, this general limit of Rs 2,00,000 may be increased to Rs 3,00,000 considering inflation over the years.

Similarly, set off of loss from rented out house property has been limited to Rs 2,00,000 with effect from financial year 2017-18, to bring it at par with the deduction available for self-occupied property Could. However, this causes difficulty to individuals as in many cases the losses are carried forward and accumulated over years and no real benefit is available, especially in cases where the interest paid on the housing loan is less than the rent received by the taxpayer. Is more than. Therefore, these limits can be reviewed by the government and may be removed or increased.
Additionally, considering the increased fares in most cities post the pandemic, it is recommended that Tier 2 cities such as Hyderabad, Pune, Bengaluru, Ahmedabad, Gurgaon, etc. be included in the list of metro cities. This will increase the limit of basic pay for the purpose of calculating House Rent Allowance (HRA) exemption from 40% to 50%.
7. Deduction in interest on loan obtained for electric vehicle – The current limit for deduction on interest paid on loan for purchasing an electric vehicle is Rs 1,50,000. Increasing such limit of interest deduction and removing the sunset clause on the loan issuance period (which is currently pegged to March 31, 2023) may emphasize the environmental, social and governance (ESG) agenda.

8. Availability of credit for tax collection at source (TCS) from individuals at the stage of tax deduction by employers – Many payments have now come under the ambit of TCS applicability and have been given enhanced rate of TCS with effect from 1 October 2023 (e.g. TCS on foreign tour programmes, purchase of foreign shares by employees of Indian companies under ESOP/RSU schemes But TCS etc.). ), may have an impact on cash flow for individuals in case of first paying such TCS and then claiming refund of the same while filing their individual tax returns. Therefore, employers should be allowed to provide credit for such TCS at the salary tax withholding stage to minimize the cash flow impact for salaried employees.
9. Tax Deducted at Source (TDS) Compliance while dealing with Non-Resident (NR) Persons – If an individual purchases property from an NR individual or pays rental income to NR individuals, additional compliance burden for the buyer or tenant in terms of obtaining Tax Deduction Account Number (‘TAN’) and filing TDS returns. Is present. This can be streamlined by introducing the use of challan-cum-returns, which is currently available only if the seller or landlord is an individual resident in India.
10. Tax liability on interest and contributions to Provident Fund (PF) – Tax laws currently provide for increased taxation on employer contributions to PF, Superannuation Fund (SAF) and National Pension System (NPS) exceeding Rs 7,50,000. However, clarity is still awaited on the identity of the funds to which additional contributions were made, calculation of accretion in case of SAF and NPS, etc. Moreover, from the financial year 2020-21, exemption was available on an individual’s contribution to PF. Canceled in cases where the individual’s contribution to PF exceeds Rs 2,50,000 per year (if there is no employer’s contribution the limit is Rs 5,00,000). PF officials have been withholding tax on such interest paid on accrual basis. It is recommended that taxation of such interest on PF be deferred till the date of withdrawal/termination of employment corresponding to the stage of taxation of PF accumulated balance.
Some other aspects where one can expect clarity from the tax authorities are:

While the above is a wish list of proposed changes to the tax laws, one must also remember that the Finance Minister has indicated that the upcoming Budget is a Vote on Account., And no grand announcement is made at that time. Therefore, taxpayers may have to wait until the new government comes in after the elections for any major changes in tax laws.
(Surbhi Marwah is Tax Partner, People Advisory Services, Private Tax, EY. Ammu Sadanandan, Director, People Advisory Services, EY and Uday Bhartia, Senior Manager, People Advisory Services, EY contributed to the article)