Budget 2024: Finance Minister Nirmala Sithraman’s Budget 2024 has raised many expectations since this is the start of the third term for the Modi Government. Reuters reported that the upcoming first full-fledged Budget 2024 of Modi 3.0 is expected to relieve taxpayers, as the government considers reducing income tax rates for specific groups of individuals. The report also indicates that the government is considering lowering income tax rates for individuals earning annual incomes of ₹10 lakh.
Moneycontrol reported, quoting government officials, that the Centre plans to raise the income threshold before any tax is levied from ₹3 lakh to ₹5 lakh in the upcoming budget. This change will apply only to those filing returns under the new tax regime.
“In the past, few tax breaks/ incentives have been extended to individual taxpayers except under the new tax regime. Hence, many believe that this year, the government should at least raise the exemption slab rates for individuals to about ₹5 lakh,” said Aarti Raote, Partner, Deloitte India.
Factors influence changes to income tax exemption limits
Several factors, including economic conditions, government priorities, revenue considerations, and political factors, influence changes to income tax exemption limits.
Regarding economic conditions, Abhishek Soni, CEO and Co-founder of Tax2win, suggests that if the economy shows signs of recovery or growth, there may be a rationale for increasing the income tax exemption limit. This adjustment could alleviate the burden on taxpayers and stimulate consumption.
Discussing government priorities, Soni notes that the Modi 3.0 administration’s decisions, reflected in their policy choices and public statements, will play a crucial role in determining whether they prioritize measures like raising exemption limits.
From a revenue perspective, any alteration in tax policy must be considered in light of its impact on government revenue. Soni emphasizes that the government must balance fiscal discipline and the desire to provide relief to taxpayers.
Lastly, political considerations, such as upcoming elections or public sentiment, may also sway decisions on tax policies. Soni underscores that these factors can influence policymakers’ direction regarding income tax exemption limits.
Revision of Section 80C Limit
The much-needed revision in the section 80C limit has remained unchanged since 2014 despite rising inflation rates. “This would not only help taxpayers combat inflation but also stimulate savings and investments in key financial instruments like ELSS, tax saver FDs, PPF, etc., aligning with the broader vision of a financially robust and prosperous India,” said Clear founder and CEO Archit Gupta.
However, given that the government is trying to encourage the taxpayers to adopt the Simplified Tax Regime, a change in the 80C may be likely, added Aarti Raote.
Increase in Interest Deduction Limit under Section 24(b)
Archit Gupta suggested that to promote homeownership further, the government ought to contemplate raising the interest deduction limit under Section 24(b) from Rs. 2,00,000 to Rs. 3,00,000. This adjustment could offer enhanced incentives for individuals considering residential property purchases, bolstering personal financial well-being and fostering growth in the real estate sector.
Budget 2024: Finance Minister Sitharaman to present seventh budget in a row
According to PTI, the Union Budget for 2024-25 is expected to be presented in Parliament during the third week of July. On February 1, Finance Minister Nirmala Sitharaman presented an interim budget for 2024-2025 due to the election year. Following the election results, Sitharaman will now present her seventh consecutive budget.
Nirmala Sitharaman, who served as a Union Minister in 2014 and 2019, was sworn in as a Union Cabinet Minister in Prime Minister Narendra Modi’s new Union Council of Ministers on June 9.
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