Finance Minister Nirmala Sitharaman’s Eighth Budget Presentation
Finance Minister Nirmala Sitharaman is set to present her budget for the eighth time on February 1. This upcoming budget will be particularly significant as it marks the second full budget of the third term for the NDA government, led by Prime Minister Modi. Each year, the budget draws considerable attention, especially concerning income tax relief and initiatives for farmers. The government has been focusing on providing various forms of relief to the middle class, and this year is expected to continue that trend.
Income Tax Relief for the Middle Class
The budget presented in July 2024 already made headlines by increasing the standard deduction limit under the new tax regime to Rs 75,000, which was a welcome relief for the middle class. However, the budget from 2023 remains a hot topic among taxpayers, as it introduced significant measures for the working middle class. During her speech, Nirmala Sitharaman announced that individuals earning up to Rs 7 lakh would not have to pay any income tax under the new tax regime, which has greatly benefited millions of salaried employees across the country.
Understanding the New and Old Tax Regimes
The New Tax Regime was first introduced in the financial year 2020-21, offering lower tax rates but eliminating several deductions and exemptions. Initially, a standard deduction of Rs 50,000 was included, which was later raised to Rs 75,000. Under this regime, there is no tax on annual incomes of Rs 0-3 lakh, with a tiered tax structure for higher earnings. In contrast, the old tax regime allows for tax-free earnings up to Rs 2.5 lakh but comes with various deductions that taxpayers can take advantage of, resulting in a different approach to tax obligations. As the budget approaches, many will be keenly watching for any new announcements that could impact their financial situations.
