Union Budget 2024: Big change in income tax slabs coming tomorrow? Here's what we know so far

Union Budget 2024: The Reserve Bank of India's (RBI) estimation for inflation is up to six per cent (four per cent +_ two per cent).

It means the central bank thinks that a thing that costs Rs 100 today is likely to cost up to Rs 106 the next year.

The Securities Exchange Board of India's inflation-adjusted calculator shows that a thing that cost Rs 10,000 10 years ago is worth Rs 17,908.48 in today's time.

Going with a six per cent inflation rate, a washing machine that cost Rs 15,000 a decade ago now costs Rs 26,862.72.

Current Tax Slabs: Income Tax Department official website

On the same lines, BankBazaar.com recently came up with a study showing that from the last time when tax slabs were changed in 2012–13, the value of Rs 1 has reduced to 55 paisa, a 45 per cent.

However, with such a seismic change, tax slabs remain as they were 12 years ago.

Some of its findings say that based on cost index values of 200 and 363 for 2012-13 and 2024-25, respectively. Here are the findings-   

- Rs 10 lakh earned in 2012-13 is now Rs 5.50 lakh

- Rs 20 lakh earned in 2012-13 is now Rs 11 lakh

- The one who earned Rs 10 lakh 10 years ago needs to earn Rs 18.15 lakh to have the same purchasing power in today's time 

- Likewise, the one who earned Rs 20 lakh a decade ago needs to earn Rs 36.30 lakh to have the same purchasing power in today's time 

- So, the 20 per cent tax slab should be Rs 9-18 lakh.

-The 30 per cent tax slab should be >Rs 18 lakh. 

- After adjusting with inflation, the 30 per cent tax slab is now a 50 per cent tax slab in real time

- Taxpayers earning above Rs 50 lakh and under Rs 1 crore are paying 55 per cent-58 per cent tax in real time.

- 'Real' tax rates have exceeded 50 per cent.

- Excess income tax being paid on income of Rs 10 lakh is Rs 43,000/year.

Bankbazaar.com's proposed tax slabs

Old vs new tax regime

How much excess tax are old regime followers paying?

BankBazaar.com says that if it takes 2012-2014 inflation numbers as the base value, here is how much excess tax the old tax regime followers are paying-

- In the old tax regime, income above Rs 5 lakh is seen attracting excess taxes. In the new regime, it's income above Rs 15 lakh.

- On income of Rs 10 lakh, the excess tax paid in the old tax regime is rs 43,226, or Rs 3,602. 

- At Rs 20 lakh income, excess tax paid is Rs 1.84 lakh in the old tax regime and Rs 67,978 in the new tax regime. 

While the new tax regime charges no tax on annual income up to Rs 7 lakh, taxpayers above that level are preferring the old tax regime, as per a BankBazaar.com study.    

As the study shows why significant changes in tax slabs are the need of hour. But the question is, will the government announce changes?

Zee Business sources recently said that the government is contemplating changes in tax slabs.

There is a likelihood that the government may come up with slabs when finance minister Nirmala Sitharaman presents her record seventh budget on July 23, 2024.