As India prepares for Budget 2024, the government is considering significant changes to income tax regulations aimed at easing the burden on taxpayers. According to reports from Moneycontrol quoting government officials, the Centre plans to raise the income threshold before taxes kick in from ₹3 lakh to ₹5 lakh under the new tax regime.

This adjustment, expected to be announced in mid-July, targets individuals filing returns under the simplified tax system. It aims to bolster disposable income, particularly for lower-income earners.

Introduced in Budget 2020, the new tax regime offers reduced tax rates but eliminates most deductions and exemptions, contrasting with the traditional structure that allows deductions for investments and exemptions like house rent and travel allowances.

Government sources indicate that despite industry requests, the highest tax rate of 30% in the new regime is likely to remain unchanged. Officials highlight the current focus on stimulating consumption among lower-income groups, which is crucial for economic recovery.

Additionally, there are no plans to revise tax rates in the old regime, maintaining the highest 30% bracket for incomes above ₹10 lakh. This approach aims to incentivize more taxpayers to opt for the new regime, which simplifies tax calculations and reduces reliance on exemptions.

In the new tax structure, individuals earning over ₹15 lakh annually face the highest tax bracket of 30%, while under the old regime, this threshold starts at ₹10 lakh.

The government’s strategy prioritizes lowering personal income tax rates over expanding spending on subsidies and schemes, aiming to streamline fiscal resources and reduce inefficiencies, as noted by a government official familiar with the matter.

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