Union Budget 2024: Double standard deduction to ₹1 lakh keeping in mind rising expenses, inflation: KPMG
The Hindu
KPMG expects Budget 2024-25 to double standard deduction, increase housing loan tax break, and rationalize capital gains tax.
Doubling standard deduction to ₹1 lakh, increasing tax break on interest paid on housing loan and rationalisation of capital gains tax regime are some of the expectations that consultancy firm KPMG has from the Budget 2024-25 to be unveiled on July 23 in Parliament.
There has been a significant rise in medical expenses, fuel costs and overall inflation. Keeping in mind the increase in personal expenditure it is popularly expected to enhance the standard deduction to ₹1 lakh from the existing limit of ₹50,000, KPMG said in a note.
With the objective to have more net disposable income which can either be spent on consumer goods or channelised as savings, it is a popular expectation that the basic tax exemption limit under the default new tax regime be increased to ₹5 lakh from ₹3 lakh, it said.
With regard to housing loans, it said there is mounting pressure on the real estate sector with recent hikes in interest rates and regulatory reforms.
To alleviate these challenges and foster home ownership, it is suggested that the government may reconsider allowing deductions for interest on self-occupied housing loans even under the new default tax regime or enhancing the deduction in the old tax regime to at least ₹3 lakh, it said.
Irrespective of the tax regime, it said, the capital gains tax structure in India today is multilayered and has differential rates for different types of assets.
Even the period of holding for a capital asset to qualify as long-term (vis-a-vis short term) varies significantly e.g., for listed equity shares it is 12 months whereas for real estate it is 24 months and for debt instruments, it is 36 months, it said.