income tax
Budgets represent the anticipated income and expenditures of the Central Government for a financial year. In India, budgets are prepared by various entities including Municipal Corporations, State Governments, and the Central Government, and approved by their respective legislative assemblies or parliaments. Historically, the Railway Budget was also presented separately, but under the current NDA government, it is now included in the overall budget.
Since independence, budgets were traditionally announced in Parliament at 4:30 PM. However, over the last two decades, this practice has shifted to a morning announcement at 11:00 AM. The date for budget presentations was originally fixed on the 28th or 29th of February but has changed in recent years to the last day of January, specifically January 31st. For the year 2024, due to election schedules, the budget is set to be presented on July 23, 2024, with the budget session commencing on July 22 and concluding on August 9, 2024.
Following the Lok Sabha Elections of 2024, in which the National Democratic Alliance (NDA) secured a third consecutive term, the government has indicated that the budget will emphasize economic growth while managing inflation. Key areas of focus will likely include infrastructure, defense, railways, renewable energy, and equitable development.
This upcoming budget will mark the 11th presentation under the Modi Government, comprising four budgets by the late Shri Arun Jaitley, one by Piyush Goyal, and five by Smt. Nirmala Sitharaman, including an interim budget. The upcoming session will also represent a record for consecutive budget presentations.
As the budget approaches, taxpayers have high expectations regarding relief measures across various tax laws, primarily the Income Tax Act and the Goods and Services Tax Act. Here are some anticipated reforms:
Simplification of Tax Regimes:
Since the financial year 2020-21, taxpayers have had to navigate two tax regimes, necessitating a comparison to determine the most beneficial option. There is a strong preference for a single, simplified tax regime.
Increase in Deduction Limit Under Section 80C:
The existing deduction limit of ₹1,50,000 under Section 80C—which encompasses life insurance premiums, Public Provident Fund contributions, and various deposit schemes—has remained unchanged since 2014. An increase to ₹2,00,000 could substantially relieve taxpayers.
Raising the Tax Exemption Limit:
Taxpayers hope for an increase in the exempt income limit for individuals and Hindu Undivided Families (HUF) from ₹3,00,000 to ₹5,00,000. Proposed tax slabs would be:
Increase in Home Loan Interest Deduction:
As the costs of purchasing or constructing a home increase, there is a call for raising the deduction limit under Section 24(b) for home loan interest payments from ₹2,00,000 to ₹3,00,000. This relief could stimulate the real estate market and enhance personal finance capabilities.
Review of House Rent Allowance (HRA) Regulations:
Currently, HRA exemptions are limited to the old tax regime, with varying exemptions depending on whether the individual lives in a metro or non-metro city. The lowest of the following three amounts is considered for exemption:
Establishment of a Social Security Fund:
Central Trade Unions have presented proposals for a social security fund to provide a minimum pension of ₹9,000 for unorganized and agricultural workers. There are also calls to reinstate the old pension scheme.
In addition to these specific requests, there are broader expectations that the Income Tax Act will be streamlined for better accessibility and usability.
The Budget 2024 is poised to be a significant landmark in India’s economic trajectory. Under the NDA government, there are great expectations for reforms aimed at fostering economic growth, delivering tax relief, and enhancing social security. The anticipated changes in tax regimes, deduction limits, and home loan interest rates are eagerly awaited. As the budget session progresses, the effectiveness of these expectations in shaping concrete policies will be paramount for driving the nation's forward momentum.