Budget 2024 income tax expectations: Finance Minister Nirmala Sitharaman should increase the basic exemption limit under the new income tax regime and also raise the standard deduction threshold in the Union Budget 2024, says EY in its pre-Budget 2024 recommendations.
Currently the basic exemption limit under the new income tax regime is Rs 3 lakh. Standard deduction of Rs 50,000 is available in both the old and the new income tax regime.
The top Budget 2024 income tax expectations and recommendations by EY are as follows:

  1. Increase in the basic exemption limit from Rs 3 lakhs to Rs 5 lakhs in the new tax regime and reduction in tax rates, in order to provide more disposable income in the hands of taxpayers
  2. Overhaul of the capital gains tax structure – change in tax rates, method of computation etc.
  3. Enhance the existing limit for deduction towards interest on housing loan for self-occupied house property from Rs 2 lakhs to at least Rs 3 lakhs
  4. Raise the standard deduction threshold from Rs 50,000 to Rs 1,00,000
  5. Remove the cap of Rs 2 lakhs towards the set-off of house property loss against other heads in the same year
  6. Increase tax-free threshold for gifts from Rs 50,000 to Rs 100,000
  7. Include tier 2 cities (Hyderabad, Pune, Bengaluru, Ahmedabad, Gurgaon etc.) in the list of metro cities for HRA exemption calculation purposes (from 40% to 50% of basic salary)
  8. Enhance the extant tax-free LTCG ceiling on sale of equity shares/equity oriented mutual funds/units of a business trust from Rs 1 lakh to Rs 2 lakhs
  9. Provide clarity on taxation of employer’s contribution to specified funds in excess of Rs 7.5 lakhs and ‘accretions’ thereon –clarify aspects such as identification of fund to which excess contributions are made, meaning of ‘accretions’ in case of Superannuation Fund/NPS and computation methodology
  10. Increase the scope of deduction in respect of purchase of electric vehicles (quantum of interest deduction and removal of sunset period for sanction of loan)