Union Budget 2024: Key Expectations And Anticipations For The Common Man

Union Budget 2024: Stakeholders across various sectors, including industries, farmers, taxpayers, and the middle class, are eagerly awaiting potential tax breaks and incentives from Nirmala Sitharaman

Union Budget 2024: With the NDA government securing another term in office, all eyes are now on the upcoming Union Budget 2024, which is expected to be announced in July. Stakeholders across various sectors, including industries, farmers, taxpayers, and the middle class, are eagerly awaiting potential tax breaks and incentives from Finance Minister Nirmala Sitharaman.

Historical Context: Tax Reforms and Adjustments

In 2020, the government introduced a new tax system in the Union Budget that featured lower tax slabs but excluded customary deductions. Despite these changes, the new tax regime was not widely adopted. Subsequent adjustments included incentives such as a standard deduction and a rebate of up to Rs 7 lakh to encourage adoption.

Five Key Expectations for Union Budget 2024

Enhancements to the New Tax Regime

Anticipation is high for improvements in the new tax regime, which has seen limited adoption despite its lower rates. One major expectation is an increase in the Section 80C deduction limit from Rs 1.5 lakh to Rs 2 lakh, a limit last revised during then Finance Minister Arun Jaitley's tenure under Prime Minister Narendra Modi's first term.

Expanding Benefits under the Old Tax Regime

Stakeholders argue that the current Rs 1.5 lakh limit under Section 80C of the Income-tax Act, 1961, restricts investments in various savings instruments like fixed deposits, ELSS, and housing loan principal. There is strong demand for this limit to be increased to Rs 2 lakh annually to accommodate a broader range of investment options.

Tax Relief Measures to Boost Consumption

Expectations are high for Income Tax reforms aimed at reducing tax burdens on lower income brackets to stimulate spending. Currently, Income Tax rates range from 5 per cent for earnings above Rs 3 lakh to 30 per cent for incomes exceeding Rs 15 lakh. Rationalising this structure could potentially increase disposable incomes, thereby boosting economic activity and GST collections.

Boost to the EV Industry

Optimism surrounds potential benefits for the electric vehicle (EV) industry. Although still nascent, the EV sector holds immense growth potential. Currently, EVs enjoy a GST rate of 5 per cent, but there is hope for reduced rates on essential components like batteries to accelerate industry expansion.

Green Energy and Taxation Initiatives

There is high expectation for green taxation initiatives as part of India's climate goals. This includes the potential introduction of a carbon tax on high-emission industries to incentivise the adoption of cleaner technologies and generate revenue for sustainable projects. Additionally, tax incentives for investments in renewable energy, energy-efficient technologies, and sustainable practices are highly anticipated.

Pre-Budget Consultations

Finance Minister Nirmala Sitharaman has commenced pre-budget discussions with various industry groups. These consultations are crucial in shaping the forthcoming Union Budget 2024, reflecting the diverse interests and expectations of stakeholders nationwide. The announcement of the Union Budget 2024 is awaited with bated breath as the nation looks forward to potential reforms and incentives that could shape the economic landscape for the coming year.