It is being said that the government may announce some exemptions in the new tax regime. Experts are demanding to increase HRA, Section 80C tax deduction and standard deduction of Rs 1 lakh in Budget 2025.

Standard Deduction Limit

A new tax system was introduced in the Union Budget 2020, which aims to simplify the tax infrastructure. However, no exemption is given in this. Only standard deduction is available. The benefit of standard deduction is also given under the old tax system. Currently, the standard deduction in the new tax system is Rs 75 thousand, which can be increased to Rs 1 lakh. At the same time, the standard deduction in the old tax system is Rs 50 thousand. This can also be increased to Rs 1 lakh.

Limit of Section 80C

Under Section 80C of the Income Tax Act, 1961, taxpayers are given tax exemption on investment up to Rs 1.5 lakh. In such a situation, now there is a demand to increase its limit, which has not changed for a long time. There is a demand to increase it to Rs 2 lakh. Currently, investors can claim exemption by investing in places like PPF, LIC, PF and home loan.

Home loan

individuals are eligible to claim deduction on payments made towards the principal amount of the home loan under section 80EE. The deduction for home loan interest payment can be up to Rs 50,000 per financial year. There is a demand to increase this in the budget as well.

HRA exemption

is also a common demand of taxpayers that HRA exemption should be included in the new tax system. Currently, this benefit is applicable only under the old tax system, which leads to tax saving. Experts believe that the inclusion of this exemption will be of great help to people.

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The salaried class is expecting the Standard Deduction to increase over a period of time. It has been almost five years since the standard deduction was revised. The standard deduction was last changed in the year 2019. The budget of 2024 will be only an interim budget and the Finance Minister has already said that there will be no major announcements in the budget. There are reports that the government may increase the standard deduction to Rs 90,000 in the budget.

Will the standard deduction increase to Rs 90,000?

Currently the standard deduction limit is Rs 50,000. Many tax experts believe that this will now increase to Rs 90,000. That is, the government can increase this limit from Rs 50,000 to Rs 90,000 in the interim budget. If this happens, it can prove to be a big saving for taxpayers.

What is standard deduction?

Standard deduction is a flat deduction the salaried class can avail of from taxable income without showing any expenditure or saving. Its objective is to achieve parity between taxpayers who receive income through salaries and income from business. Last year, the government also added standard deduction to the new tax regime. At present, standard deduction is available in both the old tax regime and the new tax regime.

This is the history of standard deduction

Standard deduction was first introduced in India in 1974. According to the history of standard deduction, this deduction is given to salaried class and pensioners to cover their expenses. It was removed in 2004–2005 to simplify taxation. It was then re-introduced in the Union Budget in 2018 and fixed at Rs 40,000 for salary class employees and pensioners.

In the interim budget presented on 1 February 2019, the standard deduction limit was increased to Rs 50,000. However, this was limited to the old tax system. In Budget 2023, it was combined with the new tax regime. Standard deduction of Rs 50,000 was allowed in the new tax regime. Now this is available on both new and old tax regime.

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This demand has increased even more when last year the government added the standard deduction with the new tax regime. It has been almost five years since the standard deduction was revised. The standard deduction was last changed in the year 2019.

Although the budget of year 2024 will be only an interim budget, still the middle class salary class is sitting with high expectations. It is expected that Finance Minister Nirmala Sitharaman may give some relaxation on some taxes. Will the standard deduction be increased by Rs 50,000 in Budget 2024?

What is standard deduction?

Standard deduction is a flat deduction the salaried class can avail of from taxable income without showing any expenditure or saving. Its objective is to achieve parity between taxpayers who receive income through salaries and income from business. At present, standard deduction is available in both the old tax regime and the new tax regime.

Standard deduction was introduced for the first time in the year 1974

Standard deduction was first introduced in India in 1974. As per the history of Standard Deduction, this deduction was available to salaried individuals and pensioners to cover some of their expenses. It was removed in 2004–2005 to simplify taxation. It was re-introduced in the Union Budget in 2018 and fixed at Rs 40,000 for salary class employees and pensioners.

In the interim budget presented on 1 February 2019, the standard deduction limit was increased to Rs 50,000. However, this was limited to the old tax system. In Budget 2023, it was combined with the new tax regime. Standard deduction of Rs 50,000 was allowed in the new tax regime.

Why should the standard deduction be increased by Rs 50,000 in Budget 2024?

There are several reasons for increasing the standard deduction limit from Rs 50,000. Many tax experts believe that it needs to be increased from Rs 50,000 to Rs 1,00,000. People need to increase the standard deduction to cope with inflation and increase disposable income.

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However, in the last several years, a lot of strictness has been shown by the Ministry of Finance in this regard. On asking questions on non-imposition of tax exemption from the Finance Minister, the answer kept getting that not imposing new tax is also tax exemption. However, with the last full budget before the elections this year, experts are also hopeful about tax exemptions.

He says that due to the increase in inflation, the government can give tax exemption as a relief to the common people. This will put additional spendable amount in the hands of common people. Tax matters expert Devendra Kumar Mishra believes that the government will definitely give relief to the common people this time.

No tax will be charged up to Rs 6 lakh

Income of common people up to Rs 5 lakh can be further increased to Rs 6 lakh tax free. The biggest relief can be found in the head of income of Rs 15 lakh without tax exemption, which is kept in the range of 20 percent. This can be increased up to Rs 17 lakh.

Standard deduction limit will also increase

Apart from this, the government can also increase the standard deduction limit for the salaried class. It can be increased from Rs 50 thousand to Rs one lakh. Also, tax exemption on interest can be 25 thousand.

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Before the budget, the Finance Minister said that the central government will continue to work for the middle class. She said that she herself is from the middle class, so she understands the problems and pressures of this class. He also said that the BJP-led NDA government (NDA Govt.) has not imposed any new tax on the middle class in any budget.

Let us tell you that most of the tax payers are from the middle class only. The Finance Minister said that no new tax has been imposed on the middle class family by the Modi government. He said that those earning up to Rs 5 lakh have been kept out of the purview of income tax by the government.

In the upcoming budget also, the government will continue to work for the middle class. Sitharaman said that middle class families use public transport the most. Keeping this in mind, Metro was brought to more than 27 places. India’s largest population from the middle class, the Finance Minister said that many middle class people are going towards the cities in search of jobs. We are continuously focusing on Smart City.

The largest section of India’s population is associated with the middle class. In such a situation, a lot of expectations are being made from the budget on 1st February. This is the last full budget of the current government before the 2024 Lok Sabha elections. In such a situation, it is expected that new announcements can be made by the government regarding income tax, health and jobs.

On behalf of the employed people, there has already been a demand from the Finance Minister to increase the income tax exemption limit and increase the investment limit under section 80C. In this budget, the standard deduction limit can be increased from 50 thousand to 75 thousand by the government.

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