Union Budget 2024: More clarification on the New Tax Regime is the need of the hour

The new income tax system received many benefits in the Union Budget 2023-24 and may get a further boost in the next interim budget to be presented on February 1. Introduced in the Union Budget 2020-21, the new tax regime became the default option from April 1, 2023, offering taxpayers an alternative to the old regime. Last year, Finance Minister Nirmala Sitharaman made some adjustments, reducing the surcharge for high-income earners and Rs. Allowed a standard deduction of 50,000.

A new income tax regime may provide further impetus.

Increase in basic exemption limit
As the government prepares to present its interim budget ahead of the general elections, salaried individuals are hopeful of positive changes.

Increase in NPS limit
Kurian Jose, CEO of Tata Pension Management, has raised the National Pension Scheme (NPS) cap for both tax regimes to Rs. 1,00,000 is recommended. This move may encourage individuals to consider the new tax system.

Deduction for interest on housing loan
Salaried individuals with housing loans are wary of the shift to the new tax regime due to the potential loss of home loan interest deduction. Abhishek Soni suggests that extending housing loan interest deduction to the new tax regime could make it more attractive. Many middle-income taxpayers with housing loans will find this benefit attractive.

A recap of the changes made in Budget 2023
In the previous budget, Sitharaman adjusted the slab rates for individuals opting for the new income tax regime:

No tax on income up to 3 lakhs
5 percent tax on income between Rs 3-6 lakh
10 percent tax on income of Rs 6-9 lakh
15 percent tax on income between Rs 9-12 lakh
20 percent tax on income of Rs 12-15 lakh
30 percent tax on income of 15 lakhs and above