Budget 2024: Finance Minister Nirmala Sitharaman may hike the income limit for individuals before any tax is levied to Rs 5 lakh from the present Rs 3 lakh limit in the upcoming budget. The government is trying to push consumption for low-income individuals by bringing in tax cuts in Budget 2024. The aim is to enhance disposable income, thereby stimulating consumption and economic growth
This will be applicable only to those filing returns under the New Tax Regime and is aimed at leaving more disposable income in the hands of individuals, particularly those in the lower earning bracket.
In Union Budget 2023, FM Sitharaman made the New Tax Regime as the default tax system. It was initially introduced in Budget 2020 that allowed taxpayers to choose it over the Old Tax Regime, which is loaded with deductions and exemptions. The New Tax Regime offers lower tax rates while forgoing most deductions and exemptions.
The report further added that the Modi 3.0 government may decrease the highest individual income tax slab rate under the new tax regime from 30 percent to 25 percent considering industry requests.
“Changes in higher income tax slabs are unlikely because consumption boost is currently needed for lower-income people,” the official added.
The government may delay increasing the highest tax bracket (currently 30% on income over Rs 10 lakh). This could encourage taxpayers to transition to the new system with lower rates and fewer deductions.
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