Government Plans To Raise Exemption Limit To ₹5 Lakh In New Tax Regime In Upcoming Budget 2024: Report

Government Plans To Raise Exemption Limit To ₹5 Lakh In New Tax Regime In Upcoming Budget 2024: Report

During Budget 2020, the Indian taxpayers were granted the option to choose between two distinct tax regimes, the old and the new tax structure.

G R MukeshUpdated: Tuesday, June 18, 2024, 07:31 PM IST
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Government Plans To Raise Exemption Limit To ₹5 Lakh In New Tax Regime In Upcoming Budget 2024: Report | Image Source: Wikipedia (Representative)

After the Lok Sabha Election 2024, and the BJP-led NDA forming the new government, all eyes are now set on the upcoming Budget 2024.

The full budget 2024 is expected in the mid of July 2024 and the central government is considering to lower certain personal income tax rates, according to the Moneycontrol report citing multiple government officials.

Raising Income thresholds

Currently, an individual has to pay taxes once their income exceeds Rs 3 lakh.

But in the upcoming budget 2024, the central government is planning to increase the income threshold for individuals before any tax is levied from Rs 3 lakh to Rs 5 lakh for those opting for the new tax regime. This move targets lower-income earners, intending to increase their spending power, reported Moneycontrol.

Tax

Tax | Representative Image/ File

Choice Between Tax Regimes

During Budget 2020, the Indian taxpayers were granted the option to choose between two distinct tax regimes, the old and the new tax structure.

Under the old tax regime, individuals/tax payers can claim deductions for various investments and exemptions such as house rent and leave travel allowances. The new tax regime, however, discourages such exemptions in favour of lower tax rates across income brackets.

Government's Stand on Tax Rates

According to the Moneycontrol report, citing officials, it added that the centre is unlikely to to reduce the highest tax rate of 30 per cent under the new regime to 25 per cent although there were calls from industry representatives.

Moreover, the government is unlikely to adjust tax rates under the old regime, maintaining the highest tax bracket at incomes above Rs 10 lakh, added the report.

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