Budget 2024: Will there be Income Tax reforms?
Income tax return
Budget 2024: India's Finance Minister Nirmala Sitharaman is set to present the interim budget just months before the country holds general elections. Any budget of a nation as huge as India has many complexities, with a lot of number-crunching involved. The budget is an extremely important plan for the country as whole of course. But what ordinary Income Tax payer keeps his eye on is whether there will be relief for his pocket.
Income Tax slabs
In India, there is now old tax regime and new tax regime
Income tax slabs under old tax regime for professionals and Non-Resident Indians are as follows
- For income upto 250,000, there is no income tax
- For income between Rs 250,000 and Rs 500,000, the income tax is five per cent.
- For income between Rs 500,000 and Rs 1 million, the income tax is 20 per cent.
- For income above Rs 1 million, the income tax is 30 per cent.
The income tax slabs for New Tax Regime (FY 2023-24)
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- For income upto Rs 300,000, there is no income tax.
- If income is between Rs 300,000 and 600,000, the tax is five per cent.
- If income is between 600,000 to 900,000, the tax will be 10 per cent.
- For income between Rs 900,000 and Rs 1.2 million, the tax will be 15 per cent
- If the income is from Rs 1.2 million to Rs 1.5 million, the tax is 20 per cent.
- For income above Rs 1.5 million, the income tax is 30 per cent.
So what is likely to change in Budget 2024?
While there is no rule prohibiting a government from changing tax slabs or overhauling the income tax regime in any budget, chances of such a thing happening in the budget to be presented in Lok Sabha on February 1, 2024 are slim.
Why? Because this is an interim budget.
What is an interim budget?
Interim budget is presented when the national elections are due in short period. The interim budget is presented so that government machinery keeps running in this transition period, and government officials (in case of India, millions) get their salary.
So in short, interim budget can be (but not completely) considered to be a stop-gap arrangement.
Another 'real' budgetwill be presented in parliament again by the new government that willl take office after Lok Sabha Elections 2024.
A stiff political opposition to an interim budget is not a regular thing as leaders across political spectrum know that it is a stop-gap arrangement. But some fireworks can be expected when the actual budget will be presented in parliament after election.
Is there a precedent of tax reforms in interim budget?
No. Major tax slab changes and tax regime overhauls have been announced in interim budgets.
Does this mean that income tax slabs will remain the same? For sure?
Again, though possibility of tax slab change is very very slim during an interim budget, there is no rule that explicitly prohibits any government from doing so.