Budget 2024: Finance Minister Sitharaman's Plan to Enhance the New Tax System

Indian Finance Minister Nirmala Sitharaman is set to present her sixth Union Budget on February 1, 2024. This will be the final budget of the Modi government's second term, with general elections scheduled to take place shortly thereafter. Given this context, the government may make significant announcements, particularly about the salaried class. In the previous budget, the government introduced various changes to the tax system.

The new tax regime, introduced in the Union Budget 2020-21, became the default option from April 1, 2023. However, taxpayers who prefer the old tax system can still utilize it. Sitharaman implemented modifications to both the new and old tax systems last year, including a standard deduction of Rs 50,000 in the new tax system. As the general elections and budget draws near, the expectations of the salaried class from the government are on the rise.

Salaried class expectations from the budget:

Increase the tax exemption limit in NPS to Rs 1 lakh. This step will encourage people to come to the new tax system.
Tax deduction on home loan interest in the new tax system. The lack of a deduction in home loans is currently making people think twice about coming to the new tax system. In such a situation, people will come to the new tax system.

Changes in tax slabs in Budget 2023:

In the last budget, Sitharaman had made adjustments in slab rates for individuals choosing the new tax system.

No tax on income up to Rs 3 lakh
5% tax on income up to Rs 6 lakh
10% tax on income up to Rs 9 lakh
15% tax on income up to Rs 12 lakh
20% tax on income up to Rs 15 lakh
30% tax on income of Rs 15 lakh and above

The salaried class is expecting several announcements from the government in the budget 2024. The government is likely to make announcements that will encourage people to come to the new tax system.