The general budget presented in February 2024 is expected to get relief in the context of income tax in 2024. This time the government can take steps towards making the new tax regime more attractive and simple. This may include several provisions such as changes in tax slab, rate cuts and increasing standard deduction. This budget is considered very important amid rising inflation for the middle class.
Emphasis on new tax regime
The main focus of the government is on maintaining the new tax regime-free, although changes in the limit and change in slabs are also being considered to give relief to taxpayers.
- There is a possibility of more concessions for health insurance and pension.
- Proposals to reduce liabilities for high income groups taxpayers are also in discussion.
- The demand to abolish the old tax regime has also gained momentum, as it is based on allowances like home loan and house rent.
Changes in last budget
Finance Minister Nirmala Sitharaman had increased the standard deduction for salary employees to Rs 75,000 in the last budget and revised the tax slab. Taxpayers gained up to Rs 17,500 from these reforms. This time there is a discussion that standard cuts can be further increased, which will save more money in the middle class pocket.
Major proposed changes and their effects
1. Changes in top tax rates
At present, 20% tax is levied on income of Rs 12-15 lakh, while 30% on Rs 15 lakh or more.
- If the tax rate on income of Rs 15 lakh or more is reduced from 30% to 25%, then the government may suffer revenue loss ranging from Rs 74,000 crore to Rs 1.1 lakh crore.
- Similarly, by imposing a 15% tax rate on income of Rs 10-15 lakh, the government can lose Rs 16,000 crore to Rs 50,000 crore.
2. Health Insurance and NPS exemption
- Additional discounts of up to Rs 50,000 for health insurance and up to Rs 75,000 on NPS (National Pension Scheme) contribution can be given.
- Revenue losses can reach Rs 85,000 crore to Rs 1.2 lakh crore by cutting tax rates with these concessions.
3. Benefits on home loan
Suggestions have also been given to give benefits for home loans in the new tax regime. However, the authorities are against such discounts, as this will make the new system complicated like the old system.
