Budget 2024, No income tax on annual income up to Rs 8.5 lakh: Will Finance Minister Nirmala Sitharaman give relief to the middle class in Budget 2024?
Union Budget 2024: Finance Minister Nirmala Sitharaman will present the first budget of Modi Government 3.0 in Parliament on July 23. In February 2024, the Finance Minister presented the interim budget in Modi Government 2.0. This will be Nirmala Sitharaman’s seventh consecutive budget.
Before the Union Budget 2024, taxpayers, especially the middle class, are expecting tax relief from the Finance Minister this time. This time the middle class is expecting from the Modi government that perhaps the wait of the last several years will end this time and the tax exemption limit will be increased. The middle class hopes that this time the government can increase the basic limit of tax exemption from Rs 3 lakh to Rs 5 lakh in Budget 2024. Along with increasing the limit of standard deduction, the government can also introduce new deduction benefits under the new tax regime.
What are the existing deduction benefits under the new tax regime?
Let us tell you that under the new tax regime, the standard deduction benefit is currently Rs 50,000. It does not provide benefits like other deductions and tax exemptions available in the old tax regime.
Experts have also predicted significant changes in the tax structure regarding the upcoming budget. It is expected that the government may increase the basic tax exemption from Rs 3 lakh to Rs 5 lakh annually under the new regime in Budget 2024.
If the basic exemption limit is increased to Rs 5 lakh, how much income will be tax free in the new tax regime?
CA Satish Surana says that if the basic exemption limit is increased, it means that a person with an annual income of Rs 8.5 lakh will not have to pay any income tax. This calculation includes standard deduction and exemption under section 87A, provided there is no change in it.
Current tax slabs under the new tax regime
| Tax Slabs | Tax Rate |
| Up to Rs 3 lakh | 0 Tax |
| Rs 3 lakh to Rs 6 lakh | 5 percent (Tax rebate u/s 87A) |
| Rs 6 lakh to Rs 9 lakh | 10 percent (Tax rebate u/s 87A up to Rs 7 lakh) |
| Rs 9 lakh to Rs 12 lakh | 15 percent |
| Rs 12 lakh to Rs 15 lakh | 20 percent |
| More than 15 lakhs | 25 percent |
According to CA, if the government gives such relief to middle-class working people in the new budget, then there will be a big increase in tax-free income and the income coming into the accounts of millions of taxpayers will increase.
Expected Tax Slabs: Assumed Revised Tax Slabs
| Tax slabs (likely under the new tax regime) | Tax Rate |
| Up to Rs 5 lakh | 0 percent |
| 5 to 6 lakh rupees | 5% (Tax rebate u/s 87A) |
| 6 to 9 lakh rupees | 10% (Tax rebate u/s 87A on income up to Rs 8 lakh) |
| 9 to 12 lakh rupees | 15 percent |
| 12 to 15 lakh rupees | 20 percent |
| More than 15 lakhs | 30 percent |
Currently, with a deduction of Rs 3 lakh and exemption under Section 87A, income up to Rs 7.5 lakh is tax-free. This also includes standard deduction.
Talking about the present time, with a deduction limit of Rs 3 lakh, there are many components in tax-free income. The first of these is a standard deduction of Rs 50,000. Apart from this, there is a tax exemption under Section 87A which is Rs 25000 on income of Rs 7 lakh and less. That is, after this deduction, a person earning up to Rs 7.5 lakh does not have to pay any income tax.
If the situation changes in Budget 2024 (exemption limit up to Rs 5 lakh)
If this situation changes in Budget 2024 and the tax exemption limit is increased to Rs 5 lakh, then there will be a big change in the limit of tax-free income. The standard deduction remains Rs 50,000. Tax rebate will also be applicable under section 87A, that is, people earning Rs 8 lakh and less will get relief of Rs 25,000. That is, with a standard deduction of Rs 50,000, no income tax will be payable on an income of Rs 8.5 lakh.
