Union Budget 2024: Modi govt mulling income tax rate cuts, all you need to know

With Union Budget 2024, the first full budget of Modi 3.0, scheduled to be presented next month, there are a lot of expectations among people on what’s in store for them.

Amid this, a report by Reuters quoted two government sources as saying that the Modi government is mulling over lowering tax rates for specific groups of individuals. If so, the move will help boost consumption in India, Asia’s third-largest economy.

Let’s first understand how a cut in personal tax will help you. A deduction in personal tax may help increase consumption in the economy and enhance savings for the middle class.

The sources, who requested anonymity due to the confidential nature of budget discussions, indicated that the plan could be announced in July when Finance Minister Nirmala Sitharaman presents the first Union Budget of the Modi 3.0 government.

Union Budget 2024: Income Tax Expectations

1 - One of the government sources told Reuters that individuals whose earning is over Rs 15 lakh annually may see some tax relief up to a certain amount which is yet to be determined.

2 - The second sources said that there could be changes made to the new income tax regime introduced in 2020, where annual income up to Rs 15 lakh is taxed at rates between 5 per cent and 20 per cent, while earnings over Rs 15 lakh are taxed at 30 per cent.

3 - The second source further said that the personal tax rate jumps six-fold when an individual’s income increases from Rs 3 lakh to Rs 15 lakh, which he described as “quite steep.”

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4 - As per the first source, the government may also consider lowering personal tax rates for annual incomes of Rs 10 lakh.

5 - The first source also informed that a new threshold is being discussed for income taxed at the highest rate of 30 per cent under the old tax regime.

6 - The second source told Reuters that any loss of income to the government through tax cuts could be partially offset by increased consumption from this category of income earners.

While staking a claim to form the National Democratic Alliance (NDA) ruled government earlier this month, Prime Minister Narendra Modi had said his administration would focus on raising middle-class savings as well as improving the quality of their lives.