Budget 2023: Policybazaar co-founder bats for special benefits for honest salaried taxpayer

With Budget 2023 just a few days away, people are expecting some major announcements related to income tax. According to experts, this budget being the last major Budget before the Lok Sabha Election of 2024, the government will try their best to cater to the needs and demands of the masses.

Manoj Sharma, co-founder, and group deputy CFO, of Policybazaar.com and Paisabazaar.com, in an exclusive interview with Zee Business, spoke about the expectations related to tax exemptions in the Budget.

Excerpts from the interview:

 1.  What do you think could be the measures introduced by the government in terms of bringing better tax relief to the salaried class?

The salaried class is generally tax compliant and pays taxes with honesty. They should be rewarded and get special benefits for the tax amount paid by them. The government can allow some deduction applicable only for salaried classes, or they can be offered some incentive based on the tax paid by them. Also, allowance of chapter VIA deduction in the new tax regime and extension of the time limit for claiming deduction under chapter VI-A (till date of filing ITR) could be considered for salaried class.

2. What do you expect from the budget in terms of introducing any tax benefits? Many are expecting better sops for loan borrowers, what is your thought on the same?

It would be interesting to see an increase in limits for 80C since no revision has been made for many years now. Also, it will be beneficial if 80C limits can be linked to income slabs.

In addition, extra tax incentives for taxpayers who invest in higher education will be a great move. Apart from that, any home loan (personal loan or loan against property) taken by taxpayers for purchasing or constructing a house should get tax benefits.

I think insurance is an important aspect for everyone and the government should encourage all salaried and other taxpayers to purchase insurance plans at an early stage so that they remain insured throughout their life. A special new section should be introduced in the budget for allowing tax deductions on the amount spent on the insurance plans. The introduction of the following tax benefits for loans other than home loans could also be considered:

a.            Tax benefits for personal loans taken for construction or renovation of residential property.

b.            Tax benefits on repayment of the principal amount of the education loan.

3. Do you think it is high time policy needs go beyond the 80C framework be it in terms of exemption limit or being more creative to bring more avenues?

Yes, 80C should be divided into 6 major segments with the limit for each segment:

Education- Tax deduction for the amount spent on the education of children 

Parents’ Health- Tax deduction for the amount spent on parents’ health and insurance

Insurance- Tax deduction for the amount spent on health insurance and term insurance

Medical expenses- Tax deduction on the amount spent on medical treatment of major diseases for self and dependent family members and preventive health checkups.

Home loans- Tax deduction for EMI/ interest payments for loans taken for the purchase of property for self-use.

Donations- Tax deduction for grants given to NGOs working for social causes

Apart from the existing tax benefits available under 80C framework, the following tax benefits could also be considered,  

a.            Allowing tax benefits for investment in various investment schemes such as Real Estate Investment Trust (REITS), Alternative Investment Fund (AIF) and other shorter period government schemes such as Kisan Vikas Patra (KVP), and National Savings Certificates (NSC).

b.            Increasing the limit of investment in NSC.

c.             Allowance of tax exemption or concessional tax rates for shareholders' investment.

4. Which tax regime is better - old or new?

In my view, the old structure of taxation is better than the new tax regime as the assessee can claim the deductions, exemptions, and allowances with which they can have proper tax planning and save taxes.  Despite the high tax rates, there are several strategies to lower your tax obligation in the old tax regime.

The new tax regime is advantageous only for people with nil or lower transactions eligible for tax deductions.

5. What could start-ups as an organisation and also the employees expect from the upcoming budget?

Startups generally will expect ease of doing business and lesser compliance burden. They also expect stability in the rules and regulations applicable to their business. Ideally, a startup’s resources must be focused on future growth instead of understanding complex regulations and ensuring compliance.

Also, apart from the employee's expectations of positive change in income tax slab rates and an increase in deduction eligible u/s 80C, ESOP taxation should be simplified for employees, and taxes on ESOP exercises should be deferred till liquidity. Most employees end up paying taxes from their pocket as liquidity is difficult for an unlisted startup.

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