Union Budget 2024: These tax payers can expect higher tax exemption

For senior citizens aged 60 and above, the limit is Rs 50,000 and includes interest income from fixed deposits under section 80TTB. The government is reportedly considering a proposal to increase the tax exemption limit on interest income from savings accounts to Rs 25,000.

Union Budget 2024: Under the current tax regime, interest income from savings accounts up to Rs 10,000 per annum is tax-exempt under Section 80TTA of the Income Tax Act. Union Budget 2024: These tax payers can expect higher tax exemption.

For senior citizens aged 60 and above, the limit is Rs 50,000 and includes interest income from fixed deposits under section 80TTB. The government is reportedly considering a proposal to increase the tax exemption limit on interest income from savings accounts to Rs 25,000.

Union Budget 2024: These tax payers can expect higher tax exemption
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With Budget 2024 due on July 23, the proposal tabled by banks in a recent meeting with key finance ministry officials is aimed at encouraging deposits amid concerns over the widening credit-deposit ratio. If passed, it would provide some relief to lenders who have been demanding incentives to increase deposits.

A final decision on this proposal is still pending. Under the current tax regime, interest income from savings accounts up to Rs 10,000 per annum is tax-exempt under Section 80TTA of the Income Tax Act. For senior citizens aged 60 and above, the limit is Rs 50,000s and includes interest income from fixed deposits under section 80TTB.

However, these benefits have been removed under the new tax regime introduced in Budget 2020. The report claimed discussions on enhancement of the old limit and interest income earned from savings accounts in scheduled commercial banks (SCBs) under the existing rules under the new regime.

Union Budget 2024: These tax payers can expect higher tax exemption
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The Reserve Bank of India’s latest Financial Stability Report noted that households are diversifying their financial savings, allocating more to non-banks and the capital market.  This budget may come as a pleasant surprise to Indian taxpayers with the Center considering tax relief for individuals.

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Among the options being evaluated, the exemption limit under the new regime has been increased from the current Rs 3 lakh to Rs 5 lakh per annum. Another option being considered is tax liability on income up to Rs 8 lakh per annum, aligning the tax structure with Economically Weaker Class (EWS) norms.  EWS includes all those whose total annual family income is less than Rs 8 lakh under general category.

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