With just about 10 days remaining before the Budget for FY25 is presented by Finance Minister Nirmala Sitharaman, discussions around possible income tax reliefs are reaching a feverish pitch.
What are the income tax reliefs that she could offer to the common man is the question as she prepares to present the first budget for Modi 3.0 government, which is the first coalition government in India in the past 10 years.
Budget Income Tax expectations
Many experts are looking towards an increase in the basic exemption limit from Rs 3 lakh to Rs 5 lakh and the standard deduction limits. Let’s see what it means.
By the way, a basic exemption limit of Rs 5 lakh is already available to super senior citizens ie, those aged 80 years and above.
If basic exemption limit is hiked
If the basic exemption limit is raised to Rs 5 lakh, individuals earning up to Rs 8.5 lakh a year could just end up paying no income tax in the new regime. This projection factors in the standard deduction as well as the rebate under section 87A of the Income Tax Act 1961, Satish Surana, a chartered accountant told the media.
If the finance minister takes such a decision, it would put considerable extra money into the hands of the common man, thinks Himadri Mukhopadhyay, secretary, Income Tax Bar Association, Calcutta, adding that the middle class would be very happy.
New Tax Regime Slabs
Under the new tax regime, which is going to be the default one from this year, the current rates are: NIL till Rs 3 lakh income, 5% between Rs 3 lakh to 6 lakh, 10% between Rs 6 lakh and Rs 9 lakh, 15% between Rs 9 lakh and Rs 12 lakh, 20% between Rs 12 lakh and Rs 15 lakh and finally at the top of the income pyramid, any income upwards ot R 15 lakh a year is taxed at 30%.
The bigger need for tax relief
One has to remember that by putting some extra cash in the pocket of the common man, Nirmala Sitharaman could be facilitating a growth in aggregate consumption which, in turn, could prompt some businesses to set up new capacities and, thereby, create employment.
None knows better than the finance minister how important employment generation has become in the Indian economy now.
The basic exemption limit is crucial for every taxpayer since it determines till what level can one earn without paying tax. There is a widespread expectation that this limit could be raised this year to Rs 5 lakh. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
