What Salaried, Individual Taxpayers Can Expect from Budget 2024

Over the years, the government has been working to make the new concessional tax regime more appealing for individual taxpayers.

To simplify and rationalise tax laws and enhance compliance, several changes are anticipated in the Union Budget 2024.

Currently, the old tax regime is more beneficial for individuals with a gross income above Rs 15,50,000 if their total deductions and exemptions exceed Rs 3,75,000 (excluding the standard deduction).

The increased cost of housing and greater awareness of investment instruments have led to higher claims for HRA exemptions and deductions under sections 80C and 80D of the Income-tax Act, as well as interest on housing loans for self-occupied property.

Consequently, many taxpayers exceed the Rs 3,75,000 limit and opt for the old tax regime.

To make the new tax regime more attractive and align with the government’s goal of a unified tax regime with fewer deductions and exemptions, several changes are expected.

Increase in Basic Exemption Limit: The basic exemption limit under the new tax regime is expected to increase from Rs 3,00,000 to Rs 5,00,000.

Reduction in Tax Rates: A reduction in tax rates or a reconfiguration of tax slabs under the new tax regime is anticipated.

Other expected changes include:

Increasing the standard deduction from Rs 50,000 to Rs 1,00,000.

Increasing the cap on interest deduction for housing loans on self-occupied property from Rs 2,00,000 to Rs 3,00,000.

Overhauling the capital gains tax structure, including raising the tax-free ceiling limit on long-term capital gains from the sale of listed equity shares and equity-oriented mutual funds from Rs 1,00,000 to Rs 2,00,000.