📷 Image Credits: Moneycontrol
In a recent report by the Times of India, it has been revealed that the finance ministry in India is planning to raise the standard deduction limit on incomes for taxpayers under the new regime. This potential adjustment comes as the third NDA government gears up for its first Union Budget. Finance Minister Nirmala Sitharaman has initiated public consultations on the budget, with discussions primarily happening within the finance ministry. These internal assessments will be further reviewed with other government branches and the Prime Minister’s Office before final decisions are made.
In the 2023 Budget, the finance minister introduced a standard deduction of Rs 50,000 for salaried taxpayers and pensioners under the new regime. Additionally, a rebate under Section 87A was increased for taxable incomes up to Rs 7 lakh, resulting in the elimination of taxes for these earners. Industry leaders have suggested adjusting rates in higher brackets to stimulate consumption. An increased standard deduction would benefit all salaried taxpayers, including higher earners, despite potential revenue losses.
The standard deduction has been a key relief for salaried individuals over the years. Initially introduced at Rs 40,000 to aid with medical and transport expenses, it was later increased to Rs 50,000 in 2019. Given the rising cost of living and inflation, there are expectations that it might be raised to a minimum of Rs 1 lakh in the upcoming budget. While major changes to the capital gains mechanism are unlikely, the government aims to align the holding period across asset classes, maintaining the status quo for now.”,
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