Budget 2024 expectations: Will FM bring any changes in income tax slabs and personal tax benefits?

With the budget announcement just around the corner, the entire nation is waiting with bated breath to see changes in income tax slabs and personal tax benefits. The anticipation becomes greater in the middle and lower-income groups since these sections are the most affected by economic volatilities. Economic trends indicate that the government might be working on major changes aimed at easing the burden on these demographics. One such step could be the adjustment in income tax slabs to provide some relief.

As per the old tax regime, the exemption limits for individual taxpayers are ₹2.5 lakh for those below 60 years, ₹3 lakh for senior citizens from 60-80 years, and ₹5 lakh for senior citizens above the age of 80. Should these limits be increased, it would be a huge step toward reducing tax burden on middle and lower-income groups. The structure of income tax slabs themselves could be revised.

The present tax rates under the old regime are 5% for income between ₹2.5 lakh to ₹5 lakh, 20% for income between ₹5 lakh to ₹10 lakh, and 30% for income above ₹10 lakh. More granular slabs or reduction in rates in the lower slabs will help provide relief.

For instance, a 10% slab for income between ₹5 lakh to ₹7.5 lakh and a 15% slab for income between ₹7.5 lakh to ₹10 lakh could ensure more funds in hand for taxpayers in both categories.

Deduction available under Section 80C, as of now, ₹1.5 lakh for investment in specified instruments, can also be increased to ₹2 lakh or even ₹2.5 lakh. This will encourage more saving and investments among middle-income earners and grant further tax relief.

In addition to this, the home loan interest deduction limit under Section 24(b) could be increased from the existing ₹2 lakh to ₹3 lakh, providing much-needed relief for homebuyers. Since healthcare makes up for an important expenditure component for several people, an increase in the deduction limit on medical insurance premiums under Sec 80D from the current ₹25,000 and ₹50,000 for senior citizens will also help lessen the financial burden on families.

The government can work out a few new tax-saving schemes that would apply to the lower-income groups. Provisions such as tax credits on education expenditure, subsidies on essential commodities, and increased social security benefits would be essential, especially for those falling under lower income groups.

Though the exact details of what the upcoming budget might hold remain yet unknown, it can safely be assumed that the government may be keen on providing some kind of relaxation in taxation for middle and lower-income groups with the much anticipated announcement.

Rohit Garg, CEO and Co- Founder, Olyv