Budget 2024: Income Tax relief for low earners on cards

The Centre is reportedly looking at rationalising the current income tax structure, especially for lower income levels, to boost consumption. 

Budget 2024 might prioritize tax cuts for low earners over welfare spending, an Indian Express report claimed.  These tax cuts, the report said, are seen as a better way to increase disposable income, which would boost consumption and economic activity. 

The report noted concerns about the “steep rise” in marginal income tax.

In the new tax system, the first slab of 5% starts at Rs 3 lakh, but by the time income reaches Rs 15 lakh, the tax rate jumps to 30%. So, while income increases fivefold, the tax rate increases sixfold, which is considered too steep, the report said. 

The move will boost consumption, crucial for reviving demand and restarting the investment cycle, particularly in consumer-focused sectors. This could also help increase GST collections, the report further noted.

BT could not independently verify the report.

Budget for the fiscal year 2024-25 will likely be presented in Parliament in late July. Finance Minister Sitharaman is expected to start pre-Budget discussions with industry groups around June 20, and a meeting with Revenue Secretary Sanjay Malhotra is scheduled for June 18.

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