Budget 2023: Need to increase 80-C limit to ₹2.5 lakh, lower peak personal tax rate, says EY

Consulting company EY India, in its pre-budget expectations, has called for an increase in the 80-C deduction limit to ₹2.5 lakh from ₹1.5 lakh currently, and a reduction of the maximum marginal personal tax rate of 42% at present.

The tax advocacy body is of the view that the government is unlikely to rejig the personal income tax slabs, but may increase a few exemption or deduction limits in the upcoming Budget 2023. According to the firm, the government may announce some green incentives and focus on strategic sectors like semiconductors.

In its budget expectation document, EY India said the government is also likely to focus on home loans, as well as concessional tax regime. “Rejigging of personal tax slabs looks unlikely, however, a few of the age-old individual centric tax exemption/deduction limits could get increased. Relief in terms of enhanced deductions for home loans may be given as housing loan interest rates have increased multiple times recently,” said EY India.

The advocacy firm expects the government to raise the deduction threshold towards the self-occupied house property interest to ₹3 lakh from the current ₹2 lakh.

The government is likely to make the concessional tax regime more attractive to the taxpayers according to EY India. “The government may scrap or totally revamp the new concessional tax regime – given that only a handful of taxpayers seem to have opted for it over the last couple of years,” EY India said.

“Some ‘green’ incentives may be granted, for instance, exemption to interest from green bonds. Investment linked incentives may be considered for strategic sectors like semiconductors,” it added.