Finance Minister Nirmala Sitharaman will present the budget for 2024-25 on Tuesday, July 23. This will be the first major budget of the third term of the Narendra Modi government. In such a situation, the middle class and taxpayers are expected to get relief. Many changes are expected in the matter of income tax in Budget 2024. These include changes in tax slabs, possible increase in standard deduction and some exemptions.
What are the current slabs for the new tax regime?
Up to ₹3 lakh: Nil
₹3-6 lakh: 5% on income above ₹3 lakh
₹6-9 lakh: ₹15,000 + 10% on income above ₹6 lakh
₹9-12 lakh: ₹45,000 + 15% on income above ₹9 lakh
₹12-15 lakh: ₹90,000 + 20% on income above ₹12 lakh
Above ₹15 lakh: ₹1.5 lakh + 30% on income above ₹15 lakh
Will the government increase the income tax exemption limit?
According to several media reports, the government may increase the 0% tax slab from the current ₹3 lakh to ₹5 lakh. If this happens, then individuals with annual income up to ₹8.5 lakh may not have to pay any tax under standard deduction and exemption under section 87A.
Will the government reduce income tax rates?
A report quoted Deloitte India partner Divya Baweja as saying, “The government may consider reducing the top tax rate from 30% to 25% within the new tax system.” The report quoted him as saying, “There is also speculation that the government may increase the limit of high tax rate from ₹10 lakh to ₹20 lakh under the old tax system.” Will the limit of standard deduction increase? According to some media reports, there is news that the limit of standard deduction can be increased in Budget 2024.
It can be increased to ₹1 lakh. Currently, a standard deduction of ₹50,000 is available on both the new and old tax systems. Let us tell you that in the Union Budget 2018, a standard deduction of ₹40,000 annually was introduced for the salaried class. It was increased to ₹50,000 in 2019 and no change has been made in it since then. Possibility of change in the limit of Section 80C It is expected that there may be a change in Section 80C in Budget 2024.
Also Read: Major Relief Expected in Budget Under New Income Tax Regime- All You Need to Know
In 2024, under 80C, there is a standard deduction of ₹40,000 per annum. A deduction of ₹1.5 lakh is claimed under section 80C. According to media reports, the government may increase this exemption to ₹2 lakh in the full budget. Let us tell you that despite the rise in inflation, the government has not made any change in the limit of 80C in the last 10 years.
Announcement may be made regarding NPS in the budget
It is expected that the scope of additional tax exemption under National Pension System (NPS) section 80CCD 1B can be increased. Also, the withdrawal limit on maturity can be increased, the government can bring it in line with other schemes like EPF.
Change in House Rent Allowance (HRA) possible?
The report quoted Abhishek Jain, partner of Kailash Chand Jain & Co., as saying that due to rising rent costs in urban areas, the house rent allowance (HRA) exemption will have to be increased. If the HRA exemption is increased, it will reduce the taxable income.
Will medical insurance premium deduction increase?
Due to rising healthcare costs, the deduction limit for medical insurance premium under Section 80D of the Income Tax Act 1961 may increase. The current limit is ₹25,000 for individuals and ₹50,000 for senior citizens.