Income Tax Slab 2024-25 Budget Highlights: No changes in tax slabs, direct and indirect tax rates

Finance Minister Nirmala Sitharaman along with the team outside the Ministry of Finance.

Interim Budget 2024 is slated to be released on February 1 at 11 am, breaking away from the tradition set during the initial term of the Narendra Modi government. The customary practice of announcing the budget on the last working day of February was altered by Jaitley during the earlier years of the Modi administration.

The Budget speech will be live streamed on Sansad TV and DD News. The Press Information Bureau (PIB) will also broadcast the Budget online on its official YouTube channel and website.

Visuals surface of Finance Minister Nirmala Sitharaman arriving at the finance ministry amid light showers in the national capital. She will announce the Union Budget 2024 later today at around 11 am.

As is tradition, the Union Finance Minister participated in the halwa ceremony, signaling the culmination of preparations for the Interim Budget 2024. This ritual involves the preparation and distribution of halwa, a dessert, to officials and staff members of the finance ministry involved in the Budget preparation. The ceremony takes place in the basement of Delhi’s North Block, which houses the ministry.

Following the ceremony, the ‘lock-in’ phase of Budget preparation commences. During this period, ministry officials and staff isolate themselves in the basement of North Block, ensuring confidentiality and secrecy surrounding the final budget document. (Images: PTI)

Finance Minister Nirmala Sithraman, MoS (F) Pankaj Chowdhary and MoS (F) Dr Bhagwat Karad with the CBDT Budget team on the eve of Interim Budget.

The New Tax Regime, despite offering lower tax rates than the Old Tax Regime, has not become the preferred choice for taxpayers according to recent studies. To enhance the attractiveness of the New Tax Regime, the Finance Minister should consider implementing several measures. This includes reducing the highest tax rate from 30% to 25% and raising the income threshold for this highest rate from Rs 15,00,000 to Rs 20,00,000. These steps may encourage more taxpayers to opt for the New Tax Regime and align their preferences with the updated tax structure.

In addition to streamlining Section 80C of the Income Tax Act, individual taxpayers have long expressed the desire for an increase in the Section 80C deduction limit. Last revised in 2014 to Rs 1.5 lakh, this deduction holds paramount importance for taxpayers under the old tax regime. Considering the rising cost of living, an upward revision of the deduction limit to at least Rs 2 lakh, compared to the current Rs 1.5 lakh, is eagerly anticipated, offering crucial relief to a majority of individuals.

A majority of taxpayers are expressing their desire for additional incentives from the government in the upcoming interim budget. Their wishlist includes an increase in the deduction limit for health insurance premiums under section 80D of the Income Tax Act and the expansion of the list of cities eligible for a 50% House Rent Allowance (HRA) tax exemption.

Section 80C of the Income Tax Act, last reviewed in 2014, is due for a crucial adjustment in the upcoming budget. This section encompasses various financial commitments like housing loan principal repayments, tax-saver fixed deposits, employees’ provident fund, children’s school fees, and life insurance premiums. To optimize benefits for taxpayers, a strategic de-cluttering of Section 80C is proposed. Separating loan repayments and insurance premiums could offer more targeted and effective tax breaks on investments.

CEO of Bankbazaar.com, Adhil Shetty, suggests introducing a separate deduction for home loans to streamline the tax-saving process for homeowners. Furthermore, the proposal includes decoupling prepayments from Section 80C, recognizing the diverse financial strategies of individuals.

As the ruling government approaches its last Budget before the upcoming election, the focus is likely to address the needs of the majority of the population. Numerous reports suggest an expected increase in the standard deduction in the upcoming interim budget.

Standard deduction serves as a fixed tax relief for salaried individuals, representing an amount deducted from the gross annual salary to reduce tax liability.

Salaried employees, anticipating a boost in their gross income, may find some relief. Research Analyst VLA Ambala While direct income tax rate cuts might face constraints due to fiscal considerations, salaried individuals could potentially expect relief through an increase in tax-free ceilings for transport, housing, and leave travel allowances.

– Government aims to reduce fiscal deficit by at least 50 basis points in 2024-25 from the current target of 5.9% of GDP

– Major subsidies on food and fertilizers to be capped at the current year’s level

– Introduction of inexpensive welfare schemes, including cash handouts for female farmers

– Anticipated increase in spending on low-cost housing initiatives

– Focus on enhancing capital spending or infrastructure expenditure, crucial for economic growth

– Allocated Rs 10 trillion ($120.5 billion) for infrastructure in the current year, over 3% of GDP. Expected further increase of up to 20% in infrastructure spending for 2024-25

All union budget documents, including the Annual Financial Statement (commonly known as the Budget), Demand for Grants (DG), Finance Bill, etc., can now easily be accessed by Members of Parliament and the general public through the ‘Union Budget Mobile App.’

The app, available in both English and Hindi, ensures hassle-free access to budget documents and is compatible with Android and iOS platforms.

The introduction of the Mahila Samman Saving Certificate is a noteworthy development announced in the Budget 2023. This one-time small savings scheme by the government allows a deposit facility of up to Rs 2 lakh in the name of women or girls for a fixed tenure of 2 years, offering a fixed interest rate of 7.5 percent with a partial withdrawal option.

Previously, the government had granted higher basic tax exemptions to women as an initiative to encourage their participation in the workforce. However, this system underwent a change after the fiscal year 2012-13. Despite this shift, the government has continued to extend benefits and reliefs to women, such as reduced interest rates on home loans and stamp duty concessions.

The personal tax exemption limit for women was raised to Rs 1,45,000, while the dividend distribution tax increased from 12.5 percent to 15 percent.

Understand Old Tax Regime in 4 points:

– Individuals with a total income not exceeding ₹2.5 lakh are exempt from income tax. For income falling in the ₹2.5-5 lakh bracket, a 5% income tax is applicable

– Those earning up to ₹5 lakh can claim a rebate of ₹12,500 under Section 87A of the Income Tax (I-T) Act

– Individuals earning ₹5-10 lakh face a 20% tax rate

– For total incomes exceeding ₹10 lakh, a 30% tax rate is applicable

Understand New Tax Regime in 3 points:

– Individuals with an annual income up to ₹3 lakh are exempt from tax

– A 5% tax rate is applied to income between ₹3-6 lakh, 10% for income between ₹6-9 lakh, 15% for income between ₹9-12 lakh, 20% for income between ₹12-15 lakh, and 30% for income above ₹15 lakh

– It’s worth noting that a tax rebate is available on income up to ₹7 lakh, providing potential benefits to those with salaries up to 7.5 lakh. Additionally, a standard deduction of ₹50,000 is applicable

Conveying optimism about his government’s potential return to power post Lok Sabha elections, PM Modi discussed the upcoming developments in July. “I am optimistic about the continuous advancement of our nation, attaining new milestones in development, and experiencing extensive and all-encompassing growth. A path of inclusive development is unfolding, and I trust that this trajectory will persist with the support and blessings of the public,” he said.

The middle class is anxiously anticipating income tax reforms that would allow them to reduce their tax payments. There is an expectation within the middle class for an increase in certain tax exemption limits under various sections such as Section 80C and Section 80D.

Anticipated tax changes in FinMin Nirmala Sitharaman’s Interim Budget presentation:

– Basic exemption limit may increase by a minimum of Rs 50,000 under both tax regimes

– Consideration for raising standard deduction for salaried employees from Rs 50,000 to Rs 1,00,000 in the budget

– A potential introduction of a simplified TDS process for home-buyers

Interim Budget 2024 is slated to be released on February 1 at 11 am, breaking away from the tradition set during the initial term of the Narendra Modi government. The customary practice of announcing the budget on the last working day of February was altered by Jaitley during the earlier years of the Modi administration. The Budget speech will be live streamed on Sansad TV and DD News. The Press Information Bureau (PIB) will also broadcast the Budget online on its official YouTube channel and website.

Finance Minister Nirmala Sitharaman is set to unveil the interim budget for the country today. This budget is of an interim nature, and the comprehensive budget will be introduced only after the formation of the new government following the Lok Sabha elections later in May this year. Stay tuned for all the latest updates on the announcements related to Income Tax and more.