New Delhi: It is time for Budget 2024, and taxpayers are already all ears for potential tax relaxations, if any, budgeted by Finance Minister Nirmala Sitharaman. After introducing the new tax regime and raising the tax exemption limit to Rs 7 lakh total earnings, the FM is likely to offer further relaxations under the new tax regime with an eye on boosting consumption to drive economic growth.
New tax regime vs old tax regime
The old tax regime has seen changes but remained savings-driven over multiple generations. There are provisions for deductions related to savings under PPF, National Pension Scheme, government saving schemes, insurance premium payments and house purchases, apart from charity.
To be sure, these deductions require sizeable paperwork and accounting. The new tax regime is targeted at the new aspirational workforce, which aims to spend more. The purpose is also to cut down the paperwork and simplify taxation, by giving more money in the hand of the salaried taxpayer so that they may spend and drive economic growth.
Lower tax outgo on salary greater than Rs 15 lakh
The government is also reportedly mulling a cut in tax rates on salaries exceeding Rs 15 lakh, which are currently taxed at 30 per cent. This may free up significant capital for these taxpayers to spend on consumption or creating assets. In this scenario, a 30 per cent tax may only kick in after the Rs 20 lakh slab.
Given the geopolitical scenario, it is important to drive up internal consumption for India to continue to achieve above 6 per cent growth, according to Sudin Sabnis, Partner, Direct Tax, Laxmikumaran & Sridharan. However, given India’s nascent social security system, taxpayers may be wary of moving to the new tax regime faster and sooner, he added.
Inflation and the case of tax slab revision
According to Richa Sawhney, Chartered Accountant, Walker Chandiok, the rising inflation rate, and the reduction of corporate taxes, make a strong case of income tax slab revision, which has not changed for quite some time. With the costs of pulses and vegetables rising, headline inflation has remained above RBI’s comfort levels, the central bank admitted in its monthly economic report.
Budget 2024: As taxpayers battle rising prices of pulses and vegetables, all eyes are on finance minister Nirmala Sitharaman to provide relief to salaried individuals by revising tax slabs? Know more. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
