As the Budget 2024 approaches, expectations are high, especially regarding potential changes in income tax policies. Finance Minister Nirmala Sitharaman, set to present her seventh consecutive budget, is at the centre of these speculations.
According to various media reports, the government is contemplating reducing income tax rates for specific income brackets. This move, particularly for those earning annual incomes of ₹10 lakh, could provide significant relief to taxpayers.
Reports suggest that the Centre is considering raising the income tax exemption limit from ₹3 lakh to ₹5 lakh. This change is expected to benefit those filing under the new tax regime, which aims to simplify the tax process and provide greater flexibility to taxpayers.
Several factors influence decisions regarding income tax exemption limits:
- Economic Conditions: As the economy recovers and shows growth signs, there is a stronger case for increasing the exemption limit. This would reduce the tax burden and potentially stimulate consumer spending.
- Government Priorities: The Modi 3.0 administration’s policy decisions and public statements will heavily influence tax policy changes. Raising exemption limits could align with their broader economic goals.
- Revenue Considerations: Any tax policy changes must consider their impact on government revenue. The balance between providing taxpayer relief and maintaining fiscal discipline is crucial.
- Political Factors: Upcoming elections and public sentiment can also sway tax policy decisions. Policymakers may prioritize tax relief to align with voter expectations.
The Section 80C limit, unchanged since 2014, may see a revision to help taxpayers combat inflation and encourage savings. Enhancing this limit would support investments in financial instruments like ELSS, tax saver FDs, and PPF, contributing to a financially robust India.
There is also speculation about raising the interest deduction limit under Section 24(b) from ₹2,00,000 to ₹3,00,000. This adjustment could incentivize homeownership and stimulate growth in the real estate sector.
