Efforts are underway to alleviate the economic challenges faced by the middle class. In this context, Finance Minister Nirmala Sitharaman may introduce specific initiatives in the upcoming budget. Given the current economic climate, a tax reduction could be proposed for families earning between 15 to 20 lakhs annually.
At present, income tax is applicable on earnings up to Rs 10 lakh. With inflation on the rise, the Government of India might contemplate a tax reduction aimed at bolstering the financial stability of the middle class.
Increase in Standard Deduction
Under the previous tax regime, a standard deduction of Rs 50,000 was available, while the new regime allows for a deduction of up to Rs 75,000. The middle class is feeling the strain of inflation, leading to calls for an increase in this standard deduction. In light of these concerns, Finance Minister Nirmala Sitharaman may take this into account. Additionally, special relief measures for senior citizens could also be explored.
There is a growing demand for this at various levels. Recent actions by the government suggest that the Government of India may take significant steps for senior citizens. In the previous tax regime, seniors enjoyed a rebate of up to two and a half lakhs, while the new regime offers three lakhs. This could potentially rise to seven lakhs in the old regime and ten lakhs in the new one.
Additionally, you can receive a deduction of up to Rs 3 lakh on home loan interest. Under Section 24B, this deduction could be highlighted in the upcoming budget. Furthermore, there is a possibility of introducing a new category for deductions on the principal amount. Previously, Section 24B allowed for a deduction of only Rs 2 lakh on home loan interest. The exemption limit for health policy premiums might also be raised to Rs 50,000 for individuals under 60 and Rs 75,000 for senior citizens.