The upcoming Union Budget 2024 is expected to bring a numbe rof changes to income tax for higher taxpayer convenience.
As the Union Budget 2024 is scheduled to be presented on July 23 by Finance Minister Nirmala Sitharaman, there are expectations of multiple changes in income tax, including changes in tax slabs, a potential hike for standard deduction, and increased exemptions.
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Will there be changes in the income tax slabs?
What are the current tax rates for the new tax regime?
The current slabs for the new tax regime are as follows:
Up to ₹3 lakh: NIL
₹3-6 lakh: 5% on income which exceeds ₹3 lakh
₹6-9 lakh: ₹15,000 + 10% on income more than ₹6 lakh
₹9-12 lakh: ₹45,000 + 15% on income more than ₹9 lakh
₹12-15 lakh: ₹90,000 + 20% on income more than ₹12 lakh
Above ₹15 lakh: ₹1.5 lakh + 30% on income more than ₹15 lakh
Will the government increase the income tax exemption limit?
The government may increase the income tax exemption limit, or the 0% tax slab from ₹3 lakh currently to ₹5 lakh, according to multiple reports.
If it happens, this could mean that individuals with an annual income up to ₹8.5 lakh could potentially not have to pay any income tax, considering the standard deduction and the rebate under section 87A.
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Will the government reduce income tax rates?
“Despite the changes introduced in Budget 2023 to incentivize taxpayers to switch to the new tax regime, the adoption rate has not met expectations,” a Mint report quoted Divya Baweja, Partner at Deloitte India as saying.
“The government is anticipated to consider lowering the top tax rate from 30% to 25% within the new tax regime,” the report quoted her as saying, and adding that “There is also speculation that the government might raise the threshold for the highest tax rate from ₹10 lakh to ₹20 lakh under the old tax regime.”
What changes will the Union Budget 2024 bring to standard deduction?
The 2018 budget saw the introduction of standard deduction at ₹40,000. This was raised to ₹50,000 in 2019, and has remained unchanged since.
The Union Budget 2024 may see an increase in standard deduction to somewhere between ₹60,000 to ₹1 lakh. This would lower the taxable income of salaried employees.
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What changes will Section 80C exemptions see in the Union Budget 2024?
Salaried employees can see their income which has to be taxed, reduce by ₹1.5 lakh by using Section 80C exemptions, which has remained unchanged since 2014, despite growing inflation.
A revision can help taxpayers to manage inflation, increase savings, and invest more, according to the report.
What change can potentially come to the National Pension System (NPS) in the Union Budget 2024?
The National Pension System (NPS) may raise additional income tax deducion limit under Section 80CCD 1B, and may increase the withdrawal limit at maturity, bringing it in line with other schemes like EPF.
Will House Rent Allowance (HRA) see changes in the Union Budget 2024?
House Rent Allowance (HRA) exemptions have to be increased due to heightening rental expenses in urban areas, the report quoted Abhishek Jain, a partner at Kailash Chand Jain & Co as saying.
If HRA exemptions are increased, it would lower the taxable income and help individuals more easily afford rented properties.
Will there be an increase in medical insurance premium deductions in the Union Budget 2024?
There may be an increase in the deduction limit for medical insurance premiums under section 80D of the Income Tax Act of 1961 due to increasing healthcare costs. The current limit is ₹25,000 for individuals and ₹50,000 for senior citizens.
