Budget 2024: Six Key Income Tax Benefits for Taxpayers to Watch Out For

As Budget 2024 approaches, taxpayers can look forward to several potential changes that could ease their financial burden. Here are six key income tax benefits expected to be announced by Finance Minister Nirmala Sitharaman on July 23:

1. Standard Deduction
   The standard deduction, which was first introduced at ₹40,000 in the 2018 budget and increased to ₹50,000 in the 2019 budget, is likely to see further adjustments. This deduction has remained unchanged since 2019.
2. Section 80C Exemption
   Salaried individuals can currently reduce their taxable income by ₹1.5 lakh per fiscal year under Section 80C. This exemption has been unchanged since 2014, but a revision is anticipated in the upcoming budget.
3. Income Tax Exemption Limit
   The Finance Minister may raise the income tax exemption threshold from ₹3 lakh to ₹5 lakh, especially for those filing under the new tax regime. This change could significantly benefit low-income taxpayers.
4. National Pension System (NPS)
   Changes to the National Pension System are expected, including an increase in the additional income tax deduction limit under Section 80CCD 1B, offering more tax-saving opportunities for NPS contributors.
5. Tax Rate Reductions
   Experts suggest the government might lower the top tax rate from 30% to 25% within the new tax regime. Additionally, the threshold for the highest tax rate under the old tax regime could be raised from ₹10 lakh to ₹20 lakh, providing relief to higher-income taxpayers.
6. House Rent Allowance (HRA)
   Increased House Rent Allowance (HRA) exemptions are expected, which would help mitigate the impact of rising rental costs, particularly in urban areas.

Stay tuned for more updates as the budget announcements unfold.