Income Tax Expectations In Budget 2024: NDA govt mulls personal tax rate cut

POTENTIAL BENEFICIARIES

• Individuals earning over Rs 15 lakh
• Also mulls reducing personal tax rates for those earning up to Rs 10 lakh

New Delhi: The NDA government is reportedly deliberating on reducing personal tax rates for specific groups of individuals. This potential move aims to stimulate consumption in India, sources said.

The proposal is anticipated to be unveiled in July alongside the presentation of the Union Budget, marking NDA government's first budget after the Lok Sabha elections.

Despite the Indian economy’s impressive growth rate of 8.2 per cent in 2023-24, a survey conducted after the elections revealed a contrasting trend. Voters expressed concerns about inflation, unemployment, and declining incomes. The growth in consumption has been comparatively slower, at half the pace of the overall economic growth.

The report further revealed that reducing personal taxes could stimulate consumption and bolster savings among the middle class. It added that the potential beneficiaries of this tax relief measure could include individuals earning over Rs 15 lakh annually, up to a specific threshold that has yet to be finalised.

The proposed revisions could amend the tax structure introduced in 2020, where annual incomes up to Rs 15 lakh are taxed between 5 per cent and 20 per cent, while earnings exceeding Rs 15 lakh face a 30 per cent tax rate.

The increase in personal tax rates by six times as income rises fivefold from Rs 3 lakh to Rs 15 lakh rupees is deemed quite steep, noted the report. The report claims that the government is also contemplating reducing personal tax rates for individuals earning up to Rs 10 lakh annually. Discussions include setting a new threshold for income taxed at the highest 30 per cent rate under the previous tax regime.

According to the report, the potential reduction in government tax revenue due to these cuts may be partly offset by increased spending from this income group.