In the lead-up to the interim Union Budget announcement on February 1, a senior finance ministry official has quashed speculations regarding an increase in the income tax rebate under the new direct tax regime. The official clarified that there is no proposal to raise the current rebate of Rs 7 lakh, stating that the budget will primarily be a vote-on-account in anticipation of the upcoming general elections in April-May 2024.
The interim budget is expected to focus on sustaining a growth rate of 10.5 percent in direct tax. Speculations suggest that major tax-related announcements might be limited due to the interim nature of the budget. The official hinted at a likely exemption from tax collected at source (TCS) on overseas credit and debit card spending by an individual, up to Rs 7 lakh per financial year. However, no other substantial tax-related changes are anticipated in the upcoming budget.
The Union Budget 2023 had previously elevated the income-tax rebate threshold from Rs 5 lakh to Rs 7 lakh for assesses opting for the new direct tax regime. Under this regime, taxpayers are required to choose between the new and old tax structures, with the former becoming the default option for filing returns from the fiscal year 2023-24.
