Budget 2024: Will Sitharaman cut middle-class income taxes?

Income tax slabs are an important component that have been receiving a lot of attention lately, with sources suggesting there may be potential tax cuts for encouraging spending in the economy. Finance Minister Nirmala Sitharaman is set to unveil the Union Budget 2024 on July 23, 2024.

This is true even if the Finance Minister's February 1 interim budget for this year contained no announcements on tax increases.

What is a slab of income tax?

The various income tax rates attributed to various income levels are referred to as income tax slabs.

Also Read: Budget 2024: Expected EV policy changes could help automakers who have already made investments.

India has a progressive income tax system, which means that if a person's income rises, so does the amount of tax they pay. Depending on the tax bracket they belong under, the higher the income, the larger the percentage of income that must be paid in taxes.

Which income tax slabs are in effect right now?

India has two different forms of income tax: the old tax regime and the new tax regime. Taxpayers can choose to revert to the previous tax system at any time, but the new one that was implemented in 2020 is the default.

Individuals who get a salary can select one option at the start of every fiscal year, but professionals and companies can only make this decision once in their lifetime.

The following are the existing tax slabs for the new regime:

For up to ₹3 lakh: nothing

₹3-6 lakh: 5 percent of revenue beyond ₹3 lakh

6 to 9 lakh rupees: ₹15,000 plus 10% of revenue over ₹6 lakh

₹9–12 lakh: ₹45,000 + 15% of earnings over ₹9 lakh

Between ₹12 and 15 lakh: ₹90,000 plus 20% of revenue over ₹12 lakh

If your income exceeds ₹15 lakh, you will be charged ₹1.5 lakh plus 30%.

Under the previous regime, there were three distinct age-based slabs: below 60 (which also included the Hindu Undivided Families (HUFs) slab), between 60 and 80 years old, and over 80 years old.

For individuals under 60 and for HUFs

NIL up to ₹2.5 lakh

5% of ₹2.5 lakh to ₹5 lakh

20% of ₹5 lakh to ₹10 lakh

Over ₹10 lakh: thirty percent

For seniors (those 60 to 80 years of age)

₹0–₹3 lakh: NOTHING

5% of ₹3 lakh to ₹5 lakh

20% of ₹5 lakh to ₹10 lakh

Over ₹10 lakh: thirty percent

For anyone over the age of 80 (Super Senior Citizens)

₹0–₹5 lakh: Nothing

20% of ₹5 lakh to ₹10 lakh

Over ₹10 lakh: thirty percent

What adjustments to the income tax slabs are anticipated in the Union Budget 2024?

As per the earlier story by Reuters, which cited two unidentified government sources, the government is contemplating reducing income tax rates for specific types of persons in order to stimulate consumption.

The standard deduction limit of ₹50,000 may also be increased by the government to a value ranging from ₹50,000 to ₹1 lakh.