Walking a tight-rope between staying fiscally prudent and meeting public expectations of lower taxes, while at the same time firing the engines of the economy, union finance minister Nirmala Sitharaman on Wednesday unveiled the last full-year budget of the Narendra Modi government, as it seeks a third term in the 2024 Lok Sabha election. Taking into account the demands and concerns of the middle class, she made five major announcements relating to the personal income tax in the first budget of the ‘Amrit Kal’.
Rebate limit increased to ₹ 7 lakh
The rebate limit in the new tax regime has been increased to ₹ 7 lakh, meaning that the people in the new tax regime with income up to ₹ 7 lakh will not have to pay any tax. The tax structure in the new personal tax regime has been changed by reducing number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh. This will provide major relief to all taxpayers in the new regime.
Benefit of standard deduction extended
The benefit of standard deduction has been extended to the salaried class and the pensioners including family pensioner under the new tax regime. Salaried individual will get standard deduction of ₹ 50,000 and pensioner ₹ 15,000 as per the proposal. Each salaried person with an income of ₹ 15.5 lakh or more will thus gain ₹ 52,500, from the above proposals.
Highest surcharge rate in income tax reduced
The highest surcharge rate in personal income tax has been reduced from 37% to 25% in the new tax regime for income above ₹2 crore. This would result in maximum tax rate of personal income tax come down to 39% which was earlier 42.74%. The limit of tax exemption on leave encashment on retirement of non-government salaried employees has been increased from ₹3 lakh to ₹25 lakh. The new income tax regime has been made the default tax regime. However, the citizens will continue to have the option to avail the benefit of the old tax regime.
Priorities of this budget
Sitharaman listed seven priorities of the union budget and said that they complement each other and act as the ‘Saptarishi’ guiding us through the Amrit Kaal. They are – inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector.
Digital public infrastructure for agriculture
The Minister said that the Digital Public infrastructure for agriculture will be built as an open source, open standard and inter operable public good. She said, this will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and start-ups.
Agriculture accelerator fund
The FM announced that an Agriculture Accelerator Fund will be set-up to encourage agri-startups by young entrepreneurs in rural areas, which will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, increase productivity and profitability.