But, how far these expectations will be fulfilled will be known only after the presentation of the budget. According to earlier information received from sources, good news is coming for the employed. Changes may be seen in the budget regarding House rent allowance (HRA).

What is going to happen for the employed?

If sources in the Finance Ministry are to be believed, there are preparations to provide big relief to those working in different cities. Good news may come especially for those living in cities like Bangalore and Pune. In Budget 2024, the Finance Minister can make changes in the tax exemption available under HRA. At present, the scope of tax exemption available to those working in non-metro cities can be increased. Apart from metro cities, announcement is also possible for residents living in other cities.

Preparation to increase the scope of tax exemption in HRA

In the current system, rules have been made for metro and non-metro cities regarding house rent allowance. In 4 metro cities, up to 50% tax exemption is available under HRA by combining Basic-DA. At the same time, in other cities there is a provision of 40% discount in HRA including Basic-DA. Now in the budget, the HRA exemption limit for people living in non-metro cities can also be increased by 50 percent. Apart from this, the exemption of Rs 60 thousand available in HRA every year for non-salaried individuals can also be increased.

Non salaried people can get gift

The limit of tax exemption on HRA for non-salaried individuals is Rs 60 thousand. This can be increased in the budget. At present, under section 80GG, non-salaried individuals get tax exemption on House Rent Allowance i.e. HRA. The limit per month is Rs 5000 and the maximum in a financial year is Rs 60 thousand. Consideration can be given to increasing this limit.

How to get Income Tax deduction in HRA?

The condition for claiming income tax on HRA is that the taxpayer lives in a rented house. Tax exemption from HRA (House rent allowance) can be claimed under Section 10 (13A) of the Income Tax Act. The total taxable income is calculated by deducting HRA from the total income.

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Will the income tax slab change?

According to sources associated with the Finance Ministry, a change in the income tax slab may be seen in the budget to provide relief to the taxpayers. However, there will not be much change. But, some relaxation is possible for people of a particular salary group. Talking about the old tax regime, there are a total of 5 slabs of income tax in the current system. Among these, income up to Rs 2.5 lakh comes in tax free category. After this, there is 5 percent tax on income between Rs 2.5 lakh to Rs 5 lakh.

At the same time, 20 percent tax has to be paid directly on income of Rs 5 lakh to Rs 10 lakh. 30 percent tax is levied on income between Rs 10 lakh to Rs 20 lakh and those with income above Rs 20 lakh also have to pay 30 percent tax. At the same time, in the new tax regime, till now salary up to Rs 7 lakh comes under the tax free ambit. Bigger relaxation can be given in this. This can be increased to Rs 10 lakh. There will be no change in the old tax regime. This step can be taken to rationalize the new tax regime.

What will be in the new income tax slab?

If sources in the Finance Ministry are to be believed, the salary structure of up to Rs 10 lakh will be in focus in the budget. There is a possibility of change in this. Currently, salary up to Rs 10 lakh comes in two tax slabs. The first is Rs 6 to 9 lakh, on which there is 10 percent tax. Whereas, 9 lakh to 12 lakh on which there is 15 percent tax. In such a situation, an attempt may be made to convert the two tax slabs into one slab of Rs 10 lakh. There is a plan to impose 10 percent tax on this also. In this, the slab of Rs 6-9 lakh can be changed.

Will people with income of Rs 15 lakh also benefit?

In the current tax system, in the new regime, 20 percent tax is levied on those with income of Rs 15 lakh. Meaning, if we look at up to Rs 10 lakh, tax is levied at the rate of 10 and 15 percent. At the same time, there is 20 percent tax on Rs 15 lakh. There is a possibility that the 15 percent slab may be abolished. 10% tax should be levied directly on income up to Rs 10 lakh and 20% tax should be levied on income between Rs 10 to 15 lakh.

In such a situation, the tax burden on those falling in the 10 to 12 percent slab will increase, but there will be huge relief up to Rs 10 lakh. If sources are to be believed, the plan is to break the slab and make it more attractive than the old regime. However, other relaxations will not be available in this.

If salary is above Rs 15 lakh then there is no benefit

Be it new tax regime or old tax regime, in both the structures, people with salary above Rs 15 lakh have to pay 30 percent tax. The situation will remain similar in the coming days also. There is no intention to give any special exemption to this income group.

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