Budget 2024: New Income Tax Regime will get another boost?

In the Union Budget 2023-24, the new income tax regime was bestowed with several advantages; the next Interim Budget, scheduled for presentation on February 1, may bestow even more benefits upon it.

Taxpayers now have an alternative to the previous system after the new one was introduced in the Union Budget 2020–21 and went into effect on April 1, 2023.

Reducing the surcharge for those with higher incomes and enabling a standard deduction of Rs.50,000 were among the changes implemented by Finance Minister Nirmala Sitharaman last year.

There may be more improvements for the new income tax system.

Increase in the Basic Exemption Limit

Salaried people are expecting improvements as the government prepares to unveil its interim budget before the general elections.

People also want the standard deduction limit, HRA exemption, and health insurance premium deduction to increase under the new system.

Increase in NPS Limit

An increase in the National Pension Scheme (NPS) cap to Rs.1,00,000 for both tax regimes is suggested by a Tax Professional. This action might encourage people to think about the new tax system.

Deduction for interest on Housing Loans

Salaried individuals with housing loans are hesitant to switch to the new tax regime because of the potential loss of home loan interest deductions.

It appears that extending the deduction for interest on housing loans to the new tax framework could make it more appealing. The benefit would appeal to many middle-income taxpayers with home loans.

Recap of changes made in Budget 2023

In the last budget, Sitharaman modified the slab rates for persons who choose the new income tax regime:

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