According to a senior government official, Union Finance Minister Nirmala Sitharaman may include some more tax waivers or exclusions at the lowest level valid just for the Old Income Tax system in the next Interim Budget, which will be delivered on February 1. The new initiatives would include an increase in income tax exemption rates nearing Rs 7 lakh, as well as extra measures for women farmers.
The new measures, together with announcements to enhance the direct tax system, will not have a negative impact on the government's projected fiscal deficit.
It should be recalled that FM Sitharaman has already stated that the Interim Budget will be devoid of any "spectacular announcements" in February. After the Lok Sabha elections in July, the entire Budget will be presented. As a result, any significant modifications are unlikely.
In the previous three to four years, the Finance Minister has adopted numerous income tax-related rules for taxpayers. In 2020-21, the finance ministry implemented an optional streamlined income tax regime with drastically decreased tax rates and exemption options.
FM Sitharaman introduced the New Tax Regime as the new default option in the FY24 Budget. She increased the incentives to support the new tax regime, including a total tax credit of up to Rs 7 lakh, up from Rs 5 lakh under the previous system.
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