In a taxpayer-friendly move, the Modi government may make minor changes in the new tax regime in Budget 2024. The government is considering increasing the existing tax exemption. The current tax exemption in the new tax regime is Rs 7 lakh. This can be increased to Rs 7.5 lakh.
The Parliamentary Elections are just around the corner and the government is trying to woo the taxpayers. It is the reasons taxpayers who have opted the new tax regime can get some relief in the form of increased limits.
In the upcoming interim budget (Vote of Account), which is scheduled for February 1, 2024, the government may increase the current limit for tax exemption.
The government can bring a new finance bill for this change.
If sources are to be believed, it can be placed in the Parliament in the second phase of the budget session.
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What can change in new budget?
In an attempt to make it more appealing to the taxpayers, the government may make minor changes in the new tax regime in Budget 2024.
For this, consideration is being given to increasing the existing tax exemption.
The current tax exemption in the new tax regime is Rs 7 lakh.
This can be increased to Rs 7.50 lakh, which means, an additional discount of Rs 50,000 can be given.
Earlier, the government had increased the exemption limit from Rs 5 lakh to Rs 7 lakh.
In this, the rebate in section 87(A) was increased from Rs 12500 to Rs 25000.
An additional exemption of Rs 50,000 is also given to taxpayers apart from tax exemption on Rs 7 lakh income.
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Income may be tax free up to Rs 8 lakh
Salary up to Rs 8 lakh can be tax free in the coming financial year.
Tax experts believe that if such a provision is made in the budget, the exemption limit could be up to Rs 8 lakh.
In the current system, there is tax exemption on income up to Rs 7.50 lakh.
This also includes basic exemption, rebate and standard deduction.
Gift of standard deduction
In the Union Budget for the year 2023-24, Finance Minister Nirmala Sitharaman had made changes in the new tax regime.
In this, the basic exemption limit was increased from Rs 2.5 lakh to Rs 3 lakh.
At the same time, the limit of rebate available up to Rs 5 lakh was increased to Rs 7 lakh.
Apart from this, the benefit of standard deduction of Rs 50,000 was also added to it.
After this, income up to Rs 7.5 lakh became tax free.
There itself, an additional rebate of Rs 15,000 was given for pensioners in the new tax regime.
Rapid changes in new tax regime
Experts believe that there will be rapid changes in the new tax regime.
The record increase in income tax returns also indicates that the government will benefit by making the new tax regime more attractive.
For this, some tax exemption will have to be included in it.
A record 8.18 crore Income Tax Returns (ITR) were filed till December 31 for the assessment year 2023-24.
Strong surge in advance tax collection
Experts believe that the government should definitely consider increasing tax exemption.
There will be many benefits from this.
However, the government is emphasising on increasing tax collection.
In the financial year 2023-24, the total advance tax collection till December 15 was 19.76 percent more than the same period last year.
In the current financial year till December 15, this tax collection is Rs 624329 crore which was Rs 521302 crore a year ago.
Direct tax collection is increasing
Till December 17, 2023, there has been a jump of 20.66 per cent in direct tax collection as compared to the same period.
Direct tax collection has been Rs 13,70,388 crore which was Rs 11,35,754 crore during the same period last year.
