Interim Budget 2024: Will taxpayers be benefitted?
Interim Budget 2024: With the Union Finance Minister all set to present the interim budget on February 1, 2024, expectations are high for additional relief and improvements within the new tax regime.
Originating from the Central Budget for 2020-21, the New Income Tax Regime officially became the default option from April 1, 2023. While the choice to adhere to the old tax system remains available, the government is actively advocating for and encouraging the widespread adoption of the new tax structure. The previous budget, under Finance Minister Nirmala Sitharaman, witnessed substantive and favourable alterations, particularly in favour of high-income persons. Notable changes included a reduction in the tax burden for high earners and the introduction of a standard deduction of Rs 50,000 under the Standard Deduction scheme.
As the Interim Budget 2024 presentation approaches, speculations abound regarding further refinements to the new tax system. Focus areas include potential increases in the basic exemption limit, House Rent Allowance (HRA) exemption, and deductions for health insurance premiums.
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Experts suggest the possibility of elevating the National Pension Scheme (NPS) limit to Rs 1,00,000. This prospective adjustment aims to incentivise taxpayers to consider the advantages offered by the new income tax system.
Experts also foresee a potential reduction in interest rates on housing loans to enhance the appeal of the new tax system. An increased deduction for housing loan interest in the new tax structure could be particularly appealing to middle-income taxpayers with home loans, fostering greater attraction towards the new income tax regime.
Examining the pivotal alterations introduced in Budget 2023, Finance Minister Nirmala Sitharaman revised the tax slab rates for taxpayers opting for the new income tax system. The progressive rates are as follows:
No tax on income up to Rs 3 lakh
5% tax on income between Rs 3 lakh to Rs 6 lakh
10% tax on income between Rs 6 lakh to Rs 9 lakh
15% tax on income between Rs 9 lakh to Rs 12 lakh
20% tax on income between Rs 12 lakh to Rs 15 lakh
30% tax on income above Rs 15 lakh
These changes aimed to alleviate the tax burden for taxpayers and streamline the overall tax structure. The interim budget 2024 is anticipated to build upon these positive changes, further encouraging the adoption of the new income tax regime and delivering additional benefits to taxpayers.
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