The NDA government has been re-elected at the center, and the Union Budget 2024 is set to be presented next month in July. Finance Minister Nirmala Sitharaman is preparing the budget with her officials. From poor families to the middle class, there are high expectations from this budget. It is particularly believed that Finance Minister Nirmala Sitharaman may make some announcements regarding tax exemptions in the budget.
Many experts also believe that the exemption limit under the new tax regime could be increased. Additionally, there may be changes in the tax slab rates under the old tax regime.
Furthermore, the exemption limit under Section 80C of the Income Tax Act could also be increased to further encourage the middle class to invest. However, these announcements will only be confirmed at the time of Budget 2024.
Income Tax Limit Could Increase from 3 to 5 Lakhs
In the upcoming budget, Finance Minister Nirmala Sitharaman may increase the income threshold for individuals from the current 3 lakhs to 5 lakhs before any taxes are applied. The government is attempting to boost consumption for low-income individuals by introducing tax cuts in Budget 2024. The aim is to increase disposable income, thereby enhancing consumption and promoting economic growth.
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Benefits for New Tax Regime Filers
The report states that this exemption will only apply to those filing returns under the new tax regime and is particularly aimed at increasing savings for low-income individuals. In the Union Budget 2023, Finance Minister Sitharaman made the new tax regime the default tax system.
Initially introduced in Budget 2020, this regime allowed taxpayers to choose it over the old tax system, which was filled with deductions and exemptions.
What Changes Will Be Made to the Tax Slabs?
The report further mentions that the Modi government, considering the industry’s requests, may reduce the highest individual income tax slab rate under the new tax regime from 30 percent to 25 percent. An official stated that changes to the higher income tax slab are unlikely, as there is a current need to boost consumption among lower-income individuals.