Finance Minister Nirmala Sitharaman will present the upcoming budget of Modi tenure (Union Budget 2025) on February 1, for which taxpayers and common people are eagerly waiting. There is special interest in the Income Tax category, where people want to see whether any changes will be announced to reduce the burden on the common man? People have high expectations from the Finance Minister regarding some things. In such a situation, it is possible that some big announcements can be made in Budget 2025. Let us know what special expectations the common man and taxpayers have from this budget.
Speculations regarding this year’s budget focus on possible changes in tax slabs and introduction of new relief measures. Apart from this, higher deductions are expected to be included in the old tax regime. Experts suggest that the government should consider increasing the deduction limit under Section 80TTA (savings account interest) from Rs 10,000 to Rs 20,000. Similarly, they recommend increasing the deduction limit for senior citizens under Section 80TTB, which is currently Rs 50,000 (for fixed deposit interest), to Rs 1 lakh.
Deduction for savings interest
Section 80TTA of the Income Tax Act, 1961, provides a deduction of up to Rs 10,000 to individuals and Hindu undivided families (HUF) on interest income from savings accounts maintained in banks, co-operative banks or post offices. This deduction is applicable to individuals below 60 years of age and HUFs. However, this does not apply to interest received from fixed deposits or recurring deposits (RD).
The deduction limit for interest income on savings bank accounts for individuals and HUF under Section 80TTA remains at Rs 10,000. This limit has not changed since its introduction in the financial year 2012-13. In such a situation, some changes are expected.
What can happen for senior citizens?
Unlike Section 80TTA, Section 80TTB is specifically designed for senior citizens and offers a wider range of deductions on various types of interest income. Senior citizens can avail deduction on income from savings, fixed and recurring deposits under Section 80TTB, which gives them tax exemption up to Rs 50,000.
This deduction is applicable on interest income from bank depositors including savings and fixed deposits as well as post office depositors, providing financial benefits to senior citizens who rely on safe investments. However, it is important to note that interest earned from bonds and debentures is not eligible for this deduction.
What is the demand being raised regarding the new tax system?
Keeping in mind the rising healthcare expenditure in India, the current limit of Rs 50,000 for senior citizens under Section 80TTB should be increased to at least Rs 1 lakh. This revision in the limit will help to balance the possible reduction in interest rates due to the expected repo rate cut by RBI. To encourage more individuals to transition to the new tax regime, it is recommended that deductions be allowed under sections 80TTA and 80TTB, as these deductions are currently exclusive to the old tax regime.
-
-
-
-
