Union Budget 2024: 7 Highly Anticipated Income Tax Reliefs

Synopsis: Salaried taxpayers are hopeful for lower income tax rates to mitigate the impacts of inflation and the surge in interest rates. They are also looking forward to incentives that encourage equity investments, including tax exemptions, which would ultimately result in increased disposable income for individuals. Furthermore, there is a collective expectation for the implementation of a more transparent tax structure and an expansion of tax exemptions within the upcoming budget.

As the presentation of the Union Budget 2024 approaches, salaried taxpayers in India are eagerly anticipating significant income tax relief measures from Finance Minister Nirmala Sitharaman on July 23. The focus is on addressing the challenges posed by inflation and rising interest rates, with a strong desire for tax reductions and structural reforms aimed at simplifying and optimizing the tax system.

Key Expectations from the Union Budget 2024:

Adjustment of Tax Slabs:

A revision in income tax slab rates is anticipated, aiming for a more equitable and progressive tax system. This adjustment could reduce tax burdens for middle-income groups. There is also speculation that benefits provided under the new tax regime could extend to the old tax framework.

Revamp of Section 80C:

There is an expectation for the government to increase the deduction limit under Section 80C, which has been static at Rs1.5 lakh since FY2014-15. An increase to at least Rs2 lakh could provide significant relief to the middle class.

Increase in Standard Deduction:

The standard deduction, which was last increased to Rs50,000 in 2019, might see an enhancement to Rs1 lakh annually, offering more relief to the salaried class.

New Tax Regime Rejig:

Potential expansion of tax deductions under the new tax regime is being considered, including benefits for health insurance and NPS contributions. There are also suggestions to reduce the top tax rate from 30% to 25% and raise the highest tax bracket threshold from Rs10 lakh to Rs20 lakh.

Improvements in the Old Tax Regime:

Expectations include increasing the income tax exemption limit to Rs5 lakh to align with the new tax regime, simplifying tax slabs, and reducing rates to ease the burden on individual taxpayers.

Hike in House Rent Allowance (HRA):

Revising HRA rules to include cities like Bengaluru, Hyderabad, Gurgaon, and Pune for a 50% salary basis exemption, recognizing their high rental costs, similar to Chennai, Mumbai, Delhi, and Kolkata.

Raising the Threshold for Section 80TTA:

There is a push to increase the interest income exemption limit on savings accounts under Section 80TTA from Rs10,000 to Rs50,000, benefiting salaried individuals who optimize earnings through various deposit accounts.

These proposed changes reflect the widespread desire among salaried taxpayers for a budget that provides substantial tax relief and addresses the economic challenges they face. As the budget presentation date nears, anticipation continues to build for these potential reforms.