Direct tax relief for middle class in Budget 2024 is ‘sufficient’: Revenue Secy

Revenue Secretary Sanjay Malhotra

The direct tax slabs rejig announced in the Union Budget amounting to savings of Rs 17,500 for the middle class along with an increase in the rebate limit to Rs 7 lakh in the new tax regime last year is ‘sufficient’ relief over a period of two years, Revenue Secretary Sanjay Malhotra said.

There has been some criticism regarding the direct tax slab rejig in the 2024 Budget leading to savings of Rs 17,500. The tax relief, while a positive step, is seen as not significantly impactful for lower and middle-income taxpayers. Critics argue that the relief provided is insufficient given the rising cost of living and inflation pressures.

“Budget has given relief of Rs 17,500 this year. In last year's Union Budget, we had reduced the number of tax slabs, and adjusted the rebate limit in the new tax regime to Rs 7 lakh, effectively giving relief of Rs 37,500 in comparison to the old tax regime.”

“Over a period of two years, this relief in personal income tax, we believe is sufficient,” Malhotra told Moneycontrol in an interview.

Budget 2024 has enhanced the standard deduction from Rs 50,000 to Rs 75,000 in the new tax regime. Also, the tax structure in the low to middle slabs has been raised slightly upwards thus reducing the tax liability. As per the calculations of the Finance Ministry, owing to the above changes, a salaried employee under the new tax regime would save up to Rs 17,500 in income tax.

Reiterating the government's focus on simplifying tax structures and rules, Finance Minister Nirmala Sitharaman has said that more than two-thirds of personal tax-payers have availed of the new tax regime in the financial year 2023-24.

The Budget announced a comprehensive review of the Income Tax Act to ensure that it is easy to understand, which will reduce the scope for disputes and litigations. The process is expected to be completed in six months.