Budget 2024 Income Tax Expectation
Finance Minister Nirmala Sitharaman will present the Union Budget 2024-25 on 23 July 2024. Common people have high expectations from the first budget of Modi Government 3.0. Many other sectors including education, health, MSME, defense, railways are expecting big announcements from the government in the budget.
Talking about taxpayers and the middle class, they are waiting for relief in income tax and along with this, the finance minister can also make changes in the new income tax regime and standard deduction.
According to experts’ estimates and various reports coming for the last several days, it is being said that the maximum focus will be on capital expenditure in the Union Budget 2024, especially on infrastructure so that GDP growth can increase. Despite many big announcements in the budget, it is believed that it is difficult for the middle class to get any major relief in tax.
1. Increasing the limit of basic exemption in tax
In Budget 2020, the government announced a new tax regime and increased the limit of basic exemption. Taxpayers who do not claim deduction for their investments benefit in this regime. Apart from this, in this regime, employees do not even need to submit their investment documents to the company.
If we talk about the old regime, then it was last changed in 2014-15. That is, it has been almost a decade since the last change. The salary of salaried taxpayers has increased in 10 years, but the basic exemption limit in tax remains the same. The finance minister is expected to increase the basic exemption limit to Rs 5 lakh in both tax regimes.
It is expected that the government will increase the limit for every tax slab in the new regime in Budget 2024-25 so that the tax burden on the middle class can be reduced. By doing this, more taxpayers than before will switch to the new regime and both their in-hand salary and spending capacity will increase.
2. Increase in limit of 80C
Like the basic tax exemption limit, the deduction under 80C was last increased in 2014-15. Due to rising inflation in the last 10 years, the expenses of the common man have increased. Under 80C, taxpayers get exemption on investments in LIC, Provident Fund Contribution, Equity Linked Savings Scheme, Public Provident Fund, Sukanya Samriddhi Yojana, National Savings Certificate, Fixed Deposit etc. It is expected that the government may increase the limit of Rs 1.5 lakh under 80C to Rs 2 lakh to provide relief to salaried taxpayers.
3. Standard Deduction
The tax landscape changed in Budget 2018 when transport allowance and medical reimbursement were replaced with the standard Rs 40,000. This means that if a salaried taxpayer does not pay any bill (except medical reimbursement), then he gets a special deduction. In the 2019 budget, the limit of this standard deduction was increased to Rs 50,000. In the budget last year, this option was also given to taxpayers choosing the new tax regime. This time in Budget 2024, the finance minister is expected to increase the standard deduction in the new regime to Rs 1 lakh. Whereas in the old regime, taxpayers are expecting the limit of standard deduction to be increased to Rs 70,000.
Let us tell you that despite all these expectations, it is believed that the tax relief given to the middle class is not in focus in Budget 2024.