No increase likely in income tax rebate in interim budget: FinMin official

Any increase in tax rebate under the new direct tax regime is unlikely in the interim Union Budget, which will be announced on February 1, a senior finance ministry official said on January 9.

Speculations were rife that the personal income tax rebate may be increased from the current Rs 7 lakh to Rs 7.5 lakh in the vote-on-account.

“There is no such proposal,” the official told Moneycontrol on condition of anonymity.

The budget to be presented on February 1 will be a vote- on-account in view of the general elections slated for April-May 2024. A vote-on-account enables a government that is completing its term to fund its expenses for a short period until a full budget is passed.

Exemption on TCS likely

The government is, however, likely to announce exemption from tax collected at source (TCS) on overseas credit and debit card spending by an individual, for up to Rs 7 lakh per financial year, in the interim budget.

An amendment to the Income-Tax Act will be a part of the Finance Bill 2024, another senior government official had told Moneycontrol earlier.

“Since the upcoming budget is a vote-on-account, no other major tax-related announcements are likely,” he had said.

Union Budget 2023 had increased the threshold for income-tax rebate from Rs 5 lakh to Rs 7 lakh for assessees opting for the new direct tax regime.

From 2023-24, the new direct tax regime also became the default option while filing returns, and taxpayers need to choose the old tax regime if they decide to opt for it. Under the new tax regime, various exemptions and deductions, including HRA, LTA, 80C, 80D, etc., cannot be claimed.

The upcoming interim budget 2024 is likely to aim for a 10.5 percent growth rate in direct tax. “Growth in direct taxes will be above the GDP growth rate. A 10.5 percent growth in direct taxes in 2024-25 is realistic. Buoyancy is likely to remain above one next year,” another senior government official had told Moneycontrol earlier.

Buoyancy captures the proportionate increase in tax revenues in response to a rise in national income.

The net direct tax collection is budgeted at Rs 18.2 lakh crore for the current fiscal.