CNBC-TV18 Budget Ballot | Citizens seek boost in income tax rebate, standard deduction limit hike, PPF and NPS tweaks

As the nation awaits the interim Budget on February 1, responses gathered from commoners from various cities via the CNBC-TV18 Budget Ballot initiative indicate there is a collective call for a re-evaluation of tax slabs to better accommodate the struggles faced by salaried individuals.

Budget ballot boxes were placed at various locations across key cities with an invitation to citizens to make known their wishes to the Finance Minister ahead of the interim Budget.

A citizen from Bengaluru writes, "I am a salaried employee and a tax-paying one. Currently, I am enrolled on the old tax regime as it is more attractive for me in terms of tax savings. I want to move towards the new tax regime but will need lower tax rates per slab. Please ensure more and more people pay tax and salaried employees are not burdened."

Currently, there are two tax slabs in India.

Various citizens have called for reductions in personal income taxes, increases in tax rebates, and the inclusion of additional benefits for taxpayers, such as education and travel concessions.

Moreover, there are pleas to address the taxation on crypto, along with requests to abolish personal income taxes altogether.

Some citizens have asked for exemptions for banking and stock market losses, with a plea to treat business and personal losses similarly.

Some want the government to increase standard deductions and medical premiums under Section 80D, citing the rise in the cost of living and inflation.

A citizen from Mumbai writes, "With high inflation, the cost of many regular items has increased manifold. I request the government to raise the standard deduction limit to ₹1 lakh. Medical 80D premium should also be increased as a lot of emphasis is given on health these days."

The standard deduction is a flat deduction from the income that is taxable under the head 'salaries' and it is currently set at ₹50,000.

Some citizens from cities like Hyderabad and Noida have emphasised the need to increase exemption limits and enhance contributions to Section 80C, too, providing relief to the middle class.

A citizen from Delhi writes, "Increase 80C limit and NPS limit for private sector employees as well as for corporate contributions."

Other suggestions include employee contributions to the National Pension Scheme (NPS) in the income tax regime and raising the Long-Term Capital Gains (LTCG) exemption limit.

Some citizens have even addressed the interest rates of the Public Provident Fund (PPF). They have emphasised that it is currently at historical lows.

Additionally, there are suggestions for potential adjustments in the tax treatment of PPF contributions to provide further relief to the salaried class.

On the other hand, some Bengaluru residents have urged the government to include the city in the list of metros for House Rent Allowance (HRA) benefits.

With Bengaluru ranking as the third costliest city in India for rental expenses, residents believe this adjustment is necessary to alleviate financial burdens.

As of now, Bengaluru is not classified as a metro city for house rent allowance (HRA) tax exemptions under income tax laws, resulting in residents being able to claim only 40% of their basic salary as tax-exempt HRA.

Additionally, other salaried individuals have sought exemptions outside of Section 80C, similar to the National Pension Scheme (NPS).

Section 80C of the Income Tax Act provides deductions for various eligible investments and expenses including NPS.

Individuals who have written to CNBC-TV18 have advocated for the introduction of additional investment options or schemes that would offer tax exemptions similar to what the NPS provides but outside the confines of Section 80C.

This would give them more flexibility in managing their taxes and optimising their financial planning.

A plea has also been made for joint tax filing by spouses, enabling tax deductions on combined incomes and rewarding housewives for contributing to savings through taxes.

From different parts of the country, there are widespread appeals to raise the tax deducted at source (TDS) limit on fixed deposit (FD) interest.

Currently, the exemption limit for TDS deduction on FDs is ₹40,000, which means that if the total interest earned for a financial year on FDs held with one branch of a bank exceeds ₹40,000, TDS will be deducted at a rate of 10%.