On Tuesday, July 23, 2024, Finance Minister Nirmala Sitharaman will present the Union Budget 2024, marking the first budget of the newly elected government. Taxpayers across the nation are eagerly awaiting significant tax reliefs, with hopes of measures that will ease their financial burden and stimulate economic growth.

Anticipated Tax Reliefs

Arun Poddar, CEO and Executive Director of Choice International Limited, expressed optimism about the upcoming budget, stating, "As we anticipate the Budget 2024, we expect measures that will further propel India's economic growth trajectory. We look forward to initiatives that will bolster the financial ecosystem, including banking, insurance, and capital markets. Some potential adjustments to the tax structure for lower-income brackets could stimulate consumer spending and drive economic momentum, further reinforcing India's growth narrative.”

Taxpayers are particularly hopeful for changes in the following areas:

Increase in Standard Deduction Limit: Currently set at Rs 50,000 in the new tax regime, experts believe the government may increase the standard deduction limit to Rs 75,000. This hike would provide taxpayers with more disposable income after accounting for deductions, potentially boosting consumer spending.

Raise the Basic Exemption Limit: Another key expectation is an increase in the basic exemption limit, currently standing at Rs 3 lakh in the new tax regime. Raising it to Rs 5 lakh would offer wider tax relief to individual taxpayers. In the old tax regime, the basic exemption limit is set at Rs 2.5 lakh.

George Alexander Muthoot, MD of Muthoot Finance, emphasized the importance of the forthcoming union budget, stating, "The forthcoming union budget is poised to chart the course for the new Indian government’s economic growth agenda. On the back of the political stability and resilient economy, it is expected to provide relief to various sections of society and benefits for various sectors."

Fiscal Consolidation and Quality Expenditure

Sonal Badhan, Economist at Bank of Baroda, highlighted the government's likely focus on fiscal consolidation and quality expenditure. "As the budget presented on 23 July 2024 will be the 1st for NDA 3.0, we expect the government to stick to its path of fiscal consolidation, without compromising on the quality of expenditure. In the wake of slowing global growth and to maintain momentum in domestic growth, the focus will be on improving rural and urban consumption, savings, and investments. In addition, we also expect this document to reflect the government’s vision for turning India into ‘Viksit Bharat’ by 2047. On the receipt front, certain reductions can be expected if the government decides to relieve the burden of individual taxpayers and give incentives for savings."

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Key Measures for Economic Growth

The Union Budget 2024 is expected to introduce several measures aimed at enhancing India's economic growth and stability. These measures include:

Boosting Rural and Urban Consumption: Initiatives to improve consumption in both rural and urban areas are crucial for maintaining domestic growth momentum. This includes policies to increase disposable incomes and stimulate spending.

Encouraging Savings and Investments: The budget may introduce incentives for savings and investments, aiming to increase capital formation and financial stability within the economy.

Enhancing the Financial Ecosystem: Efforts to strengthen banking, insurance, and capital markets will be pivotal in bolstering the overall financial ecosystem. This includes regulatory reforms and measures to increase market accessibility.

Fiscal Consolidation: Maintaining a path of fiscal consolidation is essential for long-term economic stability. This involves managing the fiscal deficit while ensuring that expenditure quality is not compromised.

Tax Structure Adjustments: Adjustments to the tax structure, particularly for lower-income brackets, could help stimulate consumer spending and drive economic momentum. This aligns with the broader goal of achieving a more inclusive and equitable economic growth.

Conclusion

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2024, there is widespread anticipation for significant tax reliefs and measures that will bolster economic growth. With key expectations including increases in the standard deduction limit and the basic exemption limit, the budget aims to address the financial burdens of taxpayers while promoting consumption and investment.

The budget will also reflect the government's commitment to fiscal consolidation and quality expenditure, ensuring that India's economic growth trajectory remains robust. By introducing initiatives that enhance the financial ecosystem and stimulate economic activity, the Union Budget 2024 seeks to pave the way for a prosperous and resilient future for India.

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