Taxpayers unlikely to receive any bonanza in Budget

After the formation of the Modi 3.0 government, preparations for the FY2024-25 general budget, that is, Union Budget 2024, have accelerated. Taxpayers hope the government will provide relief in income taxes. Recently, there were headlines about potential cuts in income tax rates, but the government has now responded to these reports.

According to a CNBC-TV18 report citing a government official, suggestions of income tax rate cuts for those earning up to Rs 15 lakh annually in Budget 2024 have been refuted. The official also emphasized that such changes would significantly impact revenue.

It is expected that the budget might take steps to boost spending, including cuts in tax rates. Lower taxes could increase disposable income, encouraging higher spending, thereby boosting consumption and economic activities. There was speculation about changes in the 20% and 30% income tax slabs.

Currently, India operates under both the old and new tax regimes. Under the new regime, tax rates for incomes up to Rs 15 lakh range from 5% to 20%, increasing to 30% for incomes above Rs 15 lakh. In the old regime, there is no tax on income up to Rs 2.5 lakh, 5% on income from Rs 2,50,001 to Rs 5,00,000, 20% from Rs 5,00,001 to Rs 10,00,000, and 30% on income above Rs 10 lakh.

The new tax regime allows tax-free income up to Rs 7 lakh after tax rebates, with salaried class receiving an additional standard deduction of Rs 50,000. This keeps incomes up to Rs 7.5 lakh out of the salary tax bracket. Under the old regime, a rebate of up to Rs 12,500 under Section 87A results in no tax on income up to Rs 5 lakh.

The exact details of what the common man can expect from the budget, particularly in terms of income tax relief, will only become clear upon the announcement of Union Budget 2024, expected in the second or third week of July.