Is 2024 is going to be the new era for middle class tax payers or will they continue to suffer as no significant changes have been made in their tax schemes in recent years?
CA Manish Kumar Sinha
Middle class tax payers are the major chunk of population in India and are the highest contributor to Indian economy. They earnings of the middle class comes with great difficulty but ends up paying taxes very easily and everywhere. It is like river, income inflows from one side and outflows from other without any storage of wealth. They end of with no savings at all and continue to be in this matrix without securing any future for themselves and their family.
Also Government has not amended or changed even single tax basket or limit for a long period and it has impacted directly the tax liability and wealth of middle class tax payer. Income tax department has provided in past some investment schemes and expenditure routes where middle calls person can get some tax benefits. Investments schemes like investment in insurance, ELSS, PPF, FD, tuition fees etc. is eligible to for deduction and hence income is reduced.
One of the investment schemes eligible for deduction is in section 80C of income tax. As per section 80C tax payer is eligible for tax benefit of Rs. 1,50,000 on making investment in PPF, Insurance or ELSS or paying principle amount of home loan repayment or children education fee. Limit of Section 80C was increased from Rs. 1,00,000 to Rs. 1,50,000 in budget 2014. Since 2014 no change in last 10 years in these limits. Same goes for Limit under section 80D. Section 80D of Income Tax Act, 1961 allows an individual to claim deduction of premium paid for health insurance and expenses for medical treatment. Limit is Rs. 25,000 for individual below 60 years and Rs. 50,000 for individual of 60 years or more. The limit under section 80D was increased from Rs. 15,000 to Rs. 25,000 in budget 2015. Since then there has been no increase in last 9 years.
Also, the income tax slab was last increased in budget 2014 from Rs. 2,00,000 to Rs. 2,50,000. It has remained unchanged from 2014. Tax Rate slab means there will be no tax upto this amount. Again this slab was amended 12 years back. So it’s about time to make some amendment in individual tax slab rate. As per view of CA Manish Kumar Sinha Where inflation is increasing every year and the above mentioned deduction and tax rate slab has not increased to adjust with inflation and provide maximum benefit to tax payers. This is burning issue for all the middle class tax payer from new government of India which is starting from 2024. With hopes of India shining and rising in 2050 as it will be middle of the century it is duty of the government to make best roadmap for the middle class tax payers and provide best benefits possible.