The question on every taxpayer's mind this morning is simple. Will the Finance Minister give the middle class a bigger zero tax window or will the government hold back after last year's expensive overhaul.
At the heart of the debate is Section 87A, the quiet lever that makes income up to Rs 12 lakh tax free under the new regime. It is not just about slab rates. The rebate wipes out tax after the calculation is done, with marginal relief preventing a sudden spike for someone who crosses the threshold by a few hundred rupees. Any shift here can redraw the line between who pays tax and who does not.
The slab structure forms the skeleton of the system. The old regime keeps its familiar jumps at five lakh, ten lakh and above. The new regime stretches the zero tax bracket to four lakh and then rises in tight steps to thirty percent above twenty four lakh. Every tweak to these steps reshapes take home pay for millions, which is why Budget morning dominates conversations from payroll teams to small businesses.
Standard deduction remains the easiest relief of all. It cuts taxable salary without forms or proof. The new regime offers seventy five thousand rupees, higher than the old regime's fifty thousand rupees. A move to one lakh rupees would be the cleanest way to boost disposable income without complex policy redesign.
Can the government stretch Section 87A so far that income up to fifteen lakh rupees lands in the zero tax zone. Some analysts say it is unlikely. Last year's tweak of slabs and rebates was projected to cost nearly one lakh crore rupees in direct tax revenue. With fiscal consolidation underway and a clear push to steer people into the new regime, another large giveaway may be difficult.
One move towards a larger rebate risks blurring the new regime's clean architecture. One move towards restraint risks angering a middle class battered by inflation and rising household costs.
Then comes the bullion storm. Gold and silver are in free fall after a historic two day global crash that stripped away years of froth. MCX gold is down by Rs 13711 to Rs 138634 per ten grams. MCX silver is down by Rs 26273 to Rs 265652 per kilogram. Traders say the collapse is intensifying because of Budget speculation on import duty.
Gold and silver bars face six percent basic customs duty and three percent GST today. A cut to four percent could slice thousands off domestic prices and flip the correction into a buying rush for households. A hike would hit jewellery demand but protect the rupee and ease pressure on the current account.
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Bullion funds say what happens today will decide whether the crash becomes an opportunity or a warning. Tax experts say what happens to Section 87A will decide whether the middle class carries home more money or watches the status quo hold.
Current Slabs (New Regime)
- Zero to Rs 4 lakh: 0 percent
- Rs 4 lakh to Rs 8 lakh: 5 percent
- Rs 8 lakh to Rs 12 lakh: 10 percent
- Rs 12 lakh to Rs 16 lakh: 15 percent
- Rs 16 lakh to Rs 20 lakh: 20 percent
- Rs 20 lakh to Rs 24 lakh: 25 percent
- Above Rs 24 lakh: 30 percent
Standard Deduction
- New regime: Rs 75,000
- Old regime: Rs 50,000
- (If raised to Rs 1 lakh, take home pay rises instantly)
What Budget Could Change
- Higher 87A limit
- New zero tax band
- Higher standard deduction
- Smoother slab steps
