Budget 2023-24: What the common man wants on the personal tax front

• In order to provide a breather to aam aadmi, policy makers could look at increasing the threshold limit for the highest tax rate from ₹10 lakh to ₹20 lakh.
• Cost of education rising rapidly, it is pertinent that the said deduction is branched off as a separate deduction similar to medical insurance.
• The government may also look at announcing certain guidance/policy-related aspects on work from home.

We are just weeks away from the Union Budget 2023 to be presented on 1 February 2023. Budget 2023 will be the 11th consecutive Budget of Prime Minister Narendra Modi and the fifth consecutive budget of Finance Minister Nirmala Sitharaman. The Budget is expected to address critical issues of the elevated levels of inflation currently seen, to boost demand, create jobs and put the economy on a sustained growth path.


Amongst the various measures required to accomplish the above, one major measure would be increasing the purchasing power of the individual, which can be done by providing personal tax concessions, thereby supporting the revival of the GDP.

Below are few expectations of individual taxpayers:

Changes in tax slabs and tax rates:

Per the current income tax provisions, an individual is required to pay taxes based on slab rates. The highest slab rate (after including surcharge and cess) for income exceeding ₹5 crore in India is at present 42.744%, which is very high compared to other Asian countries (Hong Kong – 17%, Singapore 22%, Malaysia 30%).

Further, the tax rate for individuals has not been changed since FY 2017-18, though a new tax regime was introduced in Budget 2020 (in which one could opt for lower slab rates if they forego various deductions and exemptions). However, the simplified regime has not had the desired outcome on individuals’ pockets.

Hence, in order to provide a breather to the aam aadmi under the old regime, policy makers could look at increasing the threshold limit for the highest tax rate from ₹10 lakh to ₹20 lakh.

Similarly, under the simplified tax regime, the income tax rate could be reduced to 20% for income slabs between ₹10 lakh to ₹20 lakh, and 25% for income exceeding ₹20 lakh. This will make the new regime more attractive vis-à-vis the old regime. The proposed highest slab rate under the simplified regime (including surcharge and cess) would therefore be reduced to 35.62%.

Deductions from Income tax to save tax

Expectations have been there now for some time to increase the exemption limit on tax saving investment under section 80C to at least ₹2.5 lakhs. The current limit of ₹1.5 lakhs seems quite low and it has remained so since FY 2014-15. With the increase in cost of living and inflation, the government should look at increasing the limit under Section 80C.

This will have two-fold benefits — individual taxpayers would be willing to save more and benefit from a lower tax outgo, thereby increasing the overall purchasing power.

Currently, 80C allows deduction of tuition fee paid to any university, college, school or other educational institution situated within India for any two children. However, this is allowed under the overall limit of ₹1.5 lakh and hence the deduction is not utilised to the fullest.

With cost of education rising rapidly to unprecedented levels, it is pertinent that the said deduction is branched off as a separate deduction similar to medical insurance. Hence the government could consider introducing a separate section to allow a deduction for education expenses.

Further, considering the increase in costs of medical treatments, the cost of comprehensive insurance has increased manifold and hence, the erstwhile limit of ₹25,000 (₹50,000 for senior citizens) under this section may be revisited. The limit may be increased to ₹50,000 (₹1,00,000 for senior citizens).

Also, it is unlikely that salaried individuals would keep their entire savings in a savings bank account, which earns a much lower rate of interest compared with term deposits. They may transfer some portion of their savings to term/recurring deposits in banks to earn comparatively better returns. Hence, the interest on all types of bank deposits (e.g., FDRs) may be included within the scope of section 80TTA. Further, the limit may be increased from ₹10,000 to ₹50,000.



Besides the financial expectation highlighted above, the government may also look at announcing certain guidance/policy-related aspects on work from home. After the pandemic, the working culture across organisations has undergone several changes.

Organisations have introduced work from home, remote working, hybrid working, etc. However, there are no policies/guidance with respect to various provisions (such as tax, social security, insurance, workman compensation) on account of the new remote work culture.

As we all eagerly await for Budget 2023, we hope that expectations of individual taxpayers would be met and correspondingly, growth of the Indian economy is also ensured.

(Nitin Baijal is Director with Deloitte Haskins and Sells LLP; Sahil Bhasin is Senior Manager and Kajal Gupta is Deputy Manager at the same firm)