Budget 2024: Rebate under new income tax regime may be hiked to Rs 7.5 lakh

Last week, the PFRDA chairman had said that the body has recommended employer contributions to the National Pension Scheme up to 12 per cent to be exempted from the income tax

In the interim budget, set to be announced on February 1, the Centre may raise the tax rebate under the new income tax regime to Rs 7.5 lakh from Rs 7 lakh currently, a report by Mint said on Monday, citing people close to the discussions.

This would mean that a person with an income of Rs 7.5 lakh, after a standard deduction of Rs 50,000, will not have to pay any income tax from 2024-25. The report stated that Finance Minister Nirmala Sitharaman may bring in a Finance Bill to make the changes.

In Budget 2023, the Centre raised the rebate under the new income tax regime to Rs 7 lakh from Rs 5 lakh. The basic exemption limit was also hiked to Rs 3 lakh from Rs 2.5 lakh earlier. The Centre also introduced a deduction of Rs 15,000 for a family pension.

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The income tax slabs were reduced to six from seven earlier in a bid to make the personal income tax rules easier.

Earlier, Business Standard reported that a record 81.8 million income tax returns (ITRs) were filed for the assessment year 2023-24 till December 31. It was 9 per cent higher than 75.1 million ITRs filed in the same period in 2022-23.

The Centre has been focusing on increasing its tax receipts while lowering the tax burden. In the April-November period last year, the tax revenue rose 14.7 per cent, higher than the budget estimate of 10.5 per cent for direct taxes and 10.45 per cent for indirect taxes.

Experts, however, also suggest that the Centre must consider greater tax relief for social security payments.

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Last week, a report by the news agency PTI quoted Deepak Mohanty, chairperson of the Pension Fund Regulatory and Development Authority, as saying that the body has recommended employer contributions to the National Pension Scheme up to 12 per cent to be exempted from the income tax.