Finance Minister May Increase Income Tax Exemption in Budget 2024

In anticipation of the upcoming Budget 2024, Finance Minister Nirmala Sitharaman is reportedly considering significant revisions to income tax policies, aimed at providing relief to taxpayers amid economic challenges. Scheduled as the first budget of Prime Minister Modi's third term, these proposals are expected to shape the fiscal direction of Modi 3.0.

According to a report by Reuters, the Finance Minister is contemplating raising the income tax exemption threshold, potentially from ₹3 lakh to ₹5 lakh. This adjustment could specifically benefit taxpayers filing returns under the new tax regime. Additionally, there are deliberations on reducing income tax rates for specific income brackets, particularly for individuals earning annual incomes of ₹10 lakh.

Moneycontrol, quoting government officials, highlighted the government's intent to alleviate the tax burden on middle-income groups. This move aligns with broader efforts to stimulate economic growth through increased disposable income.

Discussing the potential impact, Aarti Raote, Partner at Deloitte India, emphasized in Mint that previous budgets have seen limited tax breaks for individual taxpayers, especially under the new tax regime. Many experts advocate for a revision of the exemption slab rates to ₹5 lakh, aiming to ease financial pressures on the middle class.

Meanwhile, the stagnant Section 80C limit, unchanged since 2014 despite rising inflation, has drawn attention. Archit Gupta, Founder and CEO of Clear, highlighted in Mint the importance of revising this limit to boost savings and investments. He emphasized that such measures would not only mitigate inflationary effects but also align with the broader vision of fostering a financially secure India.

The upcoming budget, set against a backdrop of economic recovery efforts post-pandemic, is poised to address critical fiscal policies that could impact millions of taxpayers across the country. As expectations build, all eyes are on the Finance Minister's proposals, which will unfold in the Budget 2024 presentation.