Budget 2024: Government may hike exemption limit under new income tax regime to ₹5 lakh, says report

Officials further said that the Centre is unlikely to consider a request from industry representatives to reduce the highest individual income tax rate under the new tax regime from 30 percent to 25 percent.

Livemint
Published18 Jun 2024, 05:53 PM IST
Centre considering to lower personal income tax rates, according to media reports.
Centre considering to lower personal income tax rates, according to media reports.

The Indian government is considering to lower certain personal income tax rates, multiple government officials were quoted as saying by Moneycontrol.

In the upcoming budget, likely to be presented in mid-July, the Centre plans to raise the income threshold before any tax is levied from 3 lakh to 5 lakh. This change will apply only to those filing returns under the new tax regime and is intended to provide individuals, especially those in the lower earning bracket, with more disposable income.

Also read: Modi 3.0 Budget 2024 Expectations: What are Finance Minister Nirmala Sitharaman's plans for taxpayers?

Budget 2020 allowed individuals to choose between the existing structure, which offers lower tax incidence through specified investments, and a new system that provides blanket lower tax rates but requires forgoing most deductions and exemptions.

Under the old tax regime, taxpayers can claim deductions for investments under certain sections and exemptions such as house rent allowance and leave travel allowance, among others.

Officials further said that the Centre is unlikely to consider a request from industry representatives to reduce the highest individual income tax rate under the new tax regime from 30 percent to 25 percent.

"Changes in higher income tax slabs are unlikely because consumption boost is currently needed for lower-income people," an official said.

The government is unlikely to adjust rates under the old tax regime despite requests to raise the threshold for the highest income tax rate of 30 percent from 10 lakh to 20 lakh. This decision aims to encourage more people to adopt the new regime, which discourages exemptions and rebates.

Also read: Income Tax Filing 2024: What to do if Form 16 data mismatches ITR prefilled form?

In the new tax regime, those earning over 15 lakh annually fall under the highest 30-percent tax bracket, whereas, in the old regime, this bracket starts at earnings above 10 lakh.

The government is prioritizing the potential reduction of personal income tax rates over significantly increasing spending on subsidies and other schemes that are prone to wastage, according to a third official.

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First Published:18 Jun 2024, 05:53 PM IST
HomeMoneyBudget 2024: Government may hike exemption limit under new income tax regime to ₹5 lakh, says report

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