Taxpayers wish for simpler filing, greater exemption limit
Grappling with rising household expenses and inflation, the middle class has high expectations from the Budget. The taxpayers are hopeful that the Union Budget for 2025-26 on February 1 will introduce reforms that will not only make filing taxes simpler and easier but also increase exemption limit.
The current limit of Rs 1.5 lakh under Section 80C (under old regime) is too narrow, given the variety of eligible investments like EPF, PPF, insurance premiums and home loan principal repayment. The government should raise the limit to Rs 2.5 lakh would provide much-needed relief to taxpayers and encourage long-term savings, according to Col Sanjeev Govila (retd), Certified Financial Planner, CEO, Hum Fauji Initiatives, a financial advisory firm.
Individuals are of the view that with rising inflation, the standard deduction of Rs 50,000 feels inadequate. Increasing it to Rs 75,000 or Rs 1 lakh would help salaried individuals manage their disposable income better and boost consumption.
Reintroducing the long-term capital gains (LTCG) tax exemption for equity investments held for more than three years or increasing the threshold limit (currently Rs 1 lakh) could motivate retail investors to stay invested in equity markets longer, promoting financial discipline.
As physical gold remains culturally significant, promoting SGBs with higher interest rates or additional tax benefits for longer-term holdings could encourage financial gold ownership over physical gold.
One area in dire need of attention is the tax deduction limit on home loan interest payments, which has remained unchanged since 2014. “ The limit was last increased from Rs 1.5 lakh to Rs 2 lakh, but in the decade since, real estate prices have escalated significantly due to rising demand, land costs, and construction expenses.
During the same period, the average home loan ticket size has more than doubled, resulting in higher EMIs and larger interest components,” Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd, said. For many homebuyers, especially in metropolitan areas, the interest portion of their loan repayments far exceeds the current deduction limit. Enhancing the limit to at least Rs 5 lakh would provide much-needed relief and encourage homeownership.
