The Union Budget 2024-25 is expected to introduce changes to both the old and new income tax regimes to offer more relief to taxpayers and boost middle-class spending.
Potential updates include adjusting tax brackets in the old regime and raising exemption limits in the new regime, all designed to drive economic growth and increase consumer spending.
Budget 2024
The Union Budget 2024-25 is likely to bring changes to the old and new income tax systems to help taxpayers and encourage more spending among the middle class.
Here are some expected changes:
- Old Income Tax Regime: The government might adjust the tax brackets. This means changing the income ranges that determine how much tax you pay. These adjustments could lower the tax burden on individuals, allowing them to save more money.
- New Income Tax Regime: The exemption limits could be increased. This means that more of your income might be tax-free, reducing the overall tax you have to pay. This change aims to put more money in people’s hands, encouraging them to spend more.
These updates are intended to help people save money on taxes and spend more on goods and services, which can help boost the economy.
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Budget 2024 Old Income Tax Regime
There are expectations that some tax brackets under the old income tax regime will be revised.
According to a Reuters report citing government officials, the tax brackets for salaried individuals earning above Rs 15 lakh may be adjusted.
Currently, the tax rate starts at 5% for income beginning at Rs 3 lakh and jumps to 30% for income above Rs 15 lakh.
The government is also considering lowering tax rates for those earning around Rs 10 lakh annually and setting a new threshold for the highest tax rate of 30%.
Budget 2024 New Income Tax Regime
Reports indicate that the government plans to increase the exemption limit under the new income tax regime from Rs 3 lakh to Rs 5 lakh. This move aims to provide tax relief to specific taxpayer groups, boosting middle-class consumption and stimulating GDP growth.
Introduced in the 2020 Budget, taxpayers can choose between two systems: the old regime, which offers lower taxes through specific investments and exemptions, and the new regime, which provides lower tax rates without most deductions and exemptions.
The government encourages more taxpayers to adopt the new regime to reduce dependence on exemptions and rebates. Currently, under the new regime, individuals earning over Rs 15 lakh annually fall into the highest tax bracket of 30%. In contrast, the old regime places individuals earning more than Rs 10 lakh annually in this 30% bracket.
Major Income Tax Relief Expected in Budget 2024
Finance Minister Nirmala Sitharaman’s Budget 2024 has sparked high expectations as it marks the beginning of the Modi Government’s third term. According to Reuters, the upcoming Budget 2024 of Modi 3.0 is anticipated to offer tax relief, potentially reducing income tax rates for certain groups. Specifically, the government is considering lowering tax rates for individuals earning up to ₹10 lakh annually.
Moneycontrol, citing government officials, reported that the Centre plans to raise the income threshold for tax liability from ₹3 lakh to ₹5 lakh under the new tax regime. This adjustment aims to benefit taxpayers who file returns under this regime.
Aarti Raote, Partner at Deloitte India, highlighted that in recent years, tax breaks and incentives have primarily been offered under the new tax regime. She suggested that raising the exemption slab to ₹5 lakh would be a welcome move for individual taxpayers.
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Budget 2024 FAQs
Q.1. What are the expected changes to the old income tax regime in Budget 2024?
Ans. The government may adjust tax brackets, potentially lowering tax rates for individuals earning around Rs 10 lakh and revising the highest tax rate threshold.
Q.2. How might the new income tax regime change in the upcoming budget?
Ans. The exemption limit could be raised from Rs 3 lakh to Rs 5 lakh, reducing the tax burden and encouraging more middle-class spending.
Q.3. Why is the government considering these tax changes in Budget 2024?
Ans. The changes aim to provide tax relief, boost middle-class consumption, and stimulate economic growth by putting more money in taxpayers’ hands.
Q.4. What is the difference between the old and new income tax regimes?
Ans. The old regime offers lower taxes through specific investments and exemptions, while the new regime provides lower tax rates without most deductions and exemptions.
Q.5. Who might benefit the most from the proposed tax changes in Budget 2024?
Ans. Middle-class taxpayers, especially those earning up to Rs 10 lakh annually, are expected to benefit the most from the proposed tax relief measures.
