Union Budget 2024: New tax regime needs more deductions to woo salaried taxpayers, say experts

New Delhi: With the upcoming Interim Budget 2024 just days away, all eyes are on Finance Minister Nirmala Sitharaman's announcements in sectors like personal finance, agriculture, banking, financial services and insurance.

Preeti Sharma, Partner, Tax & Regulatory Services, BDO India, said the finance minister should focus on deductions for the salaried class under the new tax regime.

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"The new tax regime offers favorable outcomes for taxpayers up to an income level of Rs 7,50,000. To increase acceptance for NTR, the government should allow deduction under this regime, as employee contribution to PF (under section 80C) and employee contribution. for NPS (under Section 80CCD). This will also encourage the habit of building retirement corpus for individuals," Sharma said.

Furthermore, she argued, the presence of two regimes has also created complications for taxpayers. A clear transition plan is also required to eventually move into the tax system.

FUJIFILM India head of human resources Navneet Ahluwalia said the government should either make the new tax regime more attractive to the salaried class or increase it by including a broader standard deduction scheme to incentivize individuals in the 7 to 30 lakh salary bracket. Standard deduction and benefits under section 80C as the limit of 1.5 lakh is now a smaller amount compared to its iteration 10 years ago.