There are no major policy changes from a direct tax perspective Increase in the Section 80C deduction limit, de-cluttering of Section 80C by separating loan repayments and insurance premiums etc, increase in the Standard Deduction limit and enhanced tax benefits for homebuyers, among others, were on the wish list of the homebuyers.
Tax experts were also looking for additional measures to enhance the appeal of the New Tax Regime as it still remains unattractive for a majority of taxpayers, especially in the higher tax brackets who also make tax-saving investments.
However, there is no tax relief for them in the interim budget. Finance Minister Nirmala Sitharaman announced in her budget speech that income tax slabs remain unchanged and income up to Rs 7 lakh remains tax-free in the New Tax Regime (as earlier).
According to experts, the recent tax slab updates with new regime were substantive. Anyone earning Rs 7.5 lakh or less pays no tax. This covers most of the working population. However, reports suggest that people are still sticking to the old regime because they have a home loan, tax-saving investments, health insurance for family, retirement savings etc. Their tax-saving measures keep them from moving to the new regime. Their tax slabs are unchanged for 11 years now. No changes were expected in the interim budget for them. But that group of captive tax-savers earning Rs 12 lakh or more will have a reason to think the budget could have done more for them.
Taxpayers widely anticipated that the government would provide tax relief through a wider deduction base under Section 80C or a separate deduction for insurance premiums.
Aspects like a higher standard deduction, enhanced housing loan interest exemptions, or a tweaking of 80C instruments would have provided some cushion. So some disappointment in personal taxation among the salaried class was noted.
