More Income Tax Relief Expected for Salaried Class under New Tax Regime in the Upcoming Interim Budget 2024
Salaried class taxpayers in India may expect for a positive development very soon, as the BJP-led Modi government contemplates announcing income tax relief under the new tax regime in the upcoming interim Budget of 2024. The government is reportedly considering measures to make the new income tax regime more attractive, aiming to simplify the taxation process and encourage widespread adoption of the new regime.
Proposed Changes:
According to sources within the Ministry of Finance, discussions are underway to raise the exemption limit for the new tax regime from the existing Rs 3.5 lakh to a potentially higher limit of Rs 4 lakh. While these discussions are still in the early stages, the government appears keen on finalizing these measures around the time of the Budget announcement on February 1, 2024.
Current Tax Regimes:
Currently, there are two distinct income tax regimes in India – the new regime introduced in 2020 and the older regime. Taxpayers can choose between these two regimes to avail themselves of specific tax benefits. The Finance Minister, Nirmala Sitharaman, made significant changes to the new tax regime in the previous year’s Budget. Notably, she increased the rebate limit to Rs 7 lakh, meaning those falling under the new regime with an annual income of up to Rs 7 lakh are exempt from income tax.
Revised Tax Structure:
Under the revamped tax regime, the Finance Minister simplified the tax structure by reducing the number of tax slabs to five. The tax exemption limit was also raised to Rs 3 lakh. In this structure, no tax is levied on income up to Rs 3 lakh, and subsequent slabs are taxed at 5%, 10%, 15%, 20%, and 30%, depending on the income brackets.
Government’s Intentions:
The government’s focus on discussions around increasing the exemption limit indicates a desire to further enhance the appeal of the new tax regime. By making taxation more straightforward and potentially offering higher exemptions, the government aims to incentivize taxpayers to opt for the new system, fostering broader compliance.
Conclusion:
As discussions progress and the Union Finance Minister prepares to present the interim Budget in 2024, salaried class taxpayers can anticipate potential income tax relief. The government’s efforts to simplify the taxation process and make the new regime more attractive align with its commitment to economic reforms and ease of doing business. However, the final decision on these proposed changes will be awaited until the Budget announcement, providing taxpayers with a clearer understanding of the potential benefits coming their way.
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