FM Nirmala Sitharaman’s Game-Changing Tax Reforms! and Taxpayers hope for increase in exemption limit in Budget 2024! In the Union Budget 2020-21, a brand-new tax regime was introduced, but with a few terms and conditions. The government is actively working to make this fresh tax approach more appealing to income taxpayers. Starting April 1, 2023, the new income tax system is set as the default option. However, citizens still retain the freedom to opt for the advantages of the traditional tax regime. Stay in the know with the latest tax updates!
A year ago, the Finance Minister took a bold step by slashing surcharges for higher income brackets and introducing a standard deduction. According to Aarti Raote, Partner at Deloitte India, these strategic moves are projected to attract around 40% of taxpayers towards the new tax regime. Stay tuned for more insights on the tax landscape!
Increase in the basic exemption limit.
As the current government gears up for its interim budget ahead of the upcoming general elections, taxpayers are eagerly anticipating significant changes in the tax landscape. Salaried individuals, in particular, have high hopes for this budget, looking for an uptick in the basic exemption limit in both the new and old tax regimes. Additionally, there’s anticipation for an increase in the standard deduction limit across both tax regimes. Abhishek Soni, CEO, and Co-founder of Tax2win, expresses the collective sentiment, stating, ‘With Budget 2024, salaried individuals are also eyeing potential enhancements in HRA exemption and health insurance premium deductions under the new regime.’ Stay tuned for the latest updates on these crucial developments!
NPS
Kurian Jose, CEO of Tata Pension Management, recommends a boost in the NPS limit to ₹1,00,000/- for both tax regimes.
Deduction for interest on housing loans.
Abhishek Soni notes that salaried individuals who have home loans are hesitant to transition from the old to the new tax regime to avoid losing the home loan interest deduction permitted under the former. Expectations are high for measures to be introduced to incentivize the shift to the new tax regime in this context.
To enhance its allure, the finance minister could contemplate extending the deduction for interest on housing loans to the new tax regime, making it even more enticing. Aarti Raote emphasizes that most middle-income taxpayers, being home loan beneficiaries, would find the new tax regime highly appealing with the inclusion of this benefit.
During the Budget presentation on February 1, 2023, Finance Minister Nirmala Sitharaman made pivotal adjustments to the slab rates for individuals opting for the new income tax regime:
- No tax on income up to ₹3 lakh
- 5% tax on income between ₹3-6 lakh
- 10% tax on income between ₹6-9 lakh
- 15% tax on income between ₹9-12 lakh
- 20% tax on income between ₹12-15 lakh
- 30% tax on income of ₹15 lakh and above.
READ MORE: 2024 FD Rates for Senior Citizens Revealed!