Budget 2024: Income tax rate cut coming? Who will get it?

New Delhi: Is an income tax rate cut in the offing? Ahead of the Budget 2024 that the new NDA government will be presenting, talk of an income tax rate cut has acquired huge momentum. But will it happen? Notably, to tackle the problem of a fragile demand in the economy, the government may even be considering changing the income tax rate applicable currently.

Income tax rate cut: Whom will it benefit?

The government is considering lowering the burden of Income Tax on individuals in lower income brackets. The objective is to reduce the tax burden on households, enabling them to increase spending and thereby boost consumption and demand.

This can also potentially lead to higher GST collections as tax reduction would result in increased real income. This will push people to likely purchase more, thereby stimulating GST collections too.

Steepness in Marginal Income Tax rate

According to a report by the Indian Express, government has acknowledged that the current increase in marginal income tax rates is “too steep.” At present, under the new tax regime, an initial tax rate of 5% applies on Rs 3 lakh. But, on Income of Rs 15 lakh, a tax rate of 30 per cent applies. So, as the income increases five times to Rs 15 lakh, the marginal tax rate increases from 5% to 30%, which is six times the initial amount. Hence, the tax rate surge is considered steep by many.

Why does the Government wants to lower tax rates

To give boost to economic activities, the Government wants to increase the spending power of the people. But this time, rather than focusing on freebies, government is considering tax cuts. This is because the government also wants to keep the fiscal deficit in check. So, to increase the money supply, the government is looking at the option of Tax simplification to increase taxpayers’ take-home pay rather than overt spending on welfare schemes.

The newly formed government may present Full Budget by the third week of July for financial year 2024-25

 Budget 2024: The government is considering lowering the burden of Income Tax for individuals in lower income brackets. That may mean an income tax rate cut.  Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today