The upcoming Budget that will be presented by Finance Minister Nirmala Sitharaman in February 2025 is likely to provide income tax relief to the low-income group with tax reduction expected in the Rs 3 lakh – Rs 7 lakh tax slab under the new regime.
As per the report, the government may increase the exemption limit beyond Rs 3 lakh under the new regime.
Tax Cuts For Higher Slabs?
While big relief is being hoped for the lower-income group, as of now, there are no significant changes expected for higher tax slabs. A final decision will be made closer to the budget.
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Budget 2024: Changes Proposed By Finance Minister
The finance minister Nirmala Sitharaman in Budget 2024 announced relaxation in the income tax slabs in the new tax regime for current FY 2024-25.
The changes proposed in the new tax regime are as follows:
- Income tax slabs relaxed from incomes up to Rs 10 lakh
- Standard deduction limit for salaried and pensioners hiked to Rs 75,000 from Rs 50,000
- Standard deduction limit for family pensioners hiked to Rs 25,000 from Rs 15,000
- Deduction on employer’s NPS contribution for private sector employees hiked to 14% from 10%.
Other suggestions for Sitharaman:
Industry body CII has suggested that the government should stick to the fiscal deficit target of 4.9% of GDP for 2024-25 and 4.5% for 2025-26, cautioning that “overly aggressive targets” beyond these could adversely affect India’s economic growth.
“India has been growing rapidly amidst a slowing global economy. Prudent fiscal management for macroeconomic stability has been pivotal to this growth,” Chandrajit Banerjee, director general at CII, said, elaborating on suggestions for the forthcoming Union Budget.
CII also highlighted the announcement in the Union Budget 2024-25 to keep the fiscal deficit at levels that help reduce the debt-to-GDP ratio.
In preparation for this, the forthcoming Budget could lay out a glide path to bring the central govt’s debt to below 50% of GDP in the medium term (by 2030-31), and below 40% of GDP in the long term, CII has suggested.
Such an explicit target will have a positive impact on India’s sovereign credit rating and further on the interest rates in the economy, the Confederation of Indian Industry stated.
“To aid longer-term fiscal planning, the government should consider instituting fiscal stability reporting. This could include issuing annual reports on fiscal risks under different stress scenarios and the outlook for fiscal stability,” it said.
In other news, the Centre’s cabinet committee has appointed Sanjay Malhotra as the next RBI Governor for a three-year term beginning from December 11, 2024, according to the official notification.
