In Budget 2024, the Finance Minister is expected to give many gifts to the taxpayers. What has not happened so far is probably expected to happen this time. But, the matter is entangled on whether the benefits will increase in the old tax system i.e.
Old Tax Regime or there is a preparation to make the New Tax Regime more attractive. In such a situation, a big announcement is expected to come out of the Finance Minister’s box. There is a preparation to give big relief to the taxpayers with the old tax regime.
According to sources, this time the basic tax exemption limit can be increased to Rs 5 lakh. This decision is no less than a big relief for lakhs of taxpayers. Preparations are being made to bring important changes in the tax policy. Now all eyes are on Budget 2024, in which this big announcement can be made. Budget 2024 can be presented on 23rd July.
What is the basic tax exemption limit?
The basic tax exemption limit is the limit under which a person does not have to pay any income tax. At present, this limit is Rs 2.5 lakh in the old tax regime. At the same time, this limit is Rs 3 lakh in the new tax regime. In Budget 2024, it is increased to Rs 5 lakh in the old and new tax regime. But, the biggest benefit of this will be given to the taxpayers of the old tax regime. Because, apart from this, there is a provision of many types of exemptions in this tax system.
Who will benefit the most
By increasing the basic tax exemption limit, taxpayers will get more tax exemption, which will reduce their taxable income. By adopting the old tax regime, taxpayers get the benefit of different types of tax exemptions and deductions. In such a situation, taxpayers with high income slabs are getting more benefits. With this, more exemptions can be claimed on investments and expenses.
What will be the benefit of increasing the basic discount?
According to a report by Assocham, “Increasing the personal tax exemption limit to Rs 5 lakh will leave more money in the hands of the middle class. This will boost economic growth by increasing demand.” Personal finance expert Pankaj Mathpal believes that there is a possibility that the government may increase the basic exemption limit to Rs 5 lakh in the budget. Doing so will not make much difference. Because, taxpayers whose total income does not exceed Rs 5 lakh are already getting relief in tax (Section 87A).
It will be easier to control inflation
This can also help in adjusting to high inflation. If seen, the scope of basic exemption was increased a decade ago. In the last few years, the income of thousands of middle class has decreased due to the Kovid-19 epidemic and high inflation. Increasing tax exemption can prove to be a solid policy to provide relief to taxpayers of lower middle income class. This will also have the least impact on the tax revenue collection of the government. This is also because a large part of direct tax collection comes from taxpayers with higher income.
Will the tax exemption limit change after 2014?
The second term of the Modi government is about to end. The first term started in the year 2014. During that time, as soon as it came to power, the government gave a great news to the taxpayers. The government increased the basic tax exemption from Rs 2 lakh to Rs 2.5 lakh. But, since then, there has been no significant change in the income tax slab in the last 10 years. But, in view of the upcoming elections, the government can give some relief on this. From economists to financial experts, everyone believes that there should be a change in the tax exemption limit.
