Budget 2024: 5 Income Tax Changes Citizens, Experts Are Expecting

Finance Minister Nirmala Sitharaman will present the Budget in parliament from 11 am today, and the most anticipation is around whether the government will provide tax relief to the middle class. The Finance Minister will walk the tight rope as she looks to stimulate economic growth while also providing relief to taxpayers.

The middle class got little in the pre-election interim Budget, so their expectations are high.

Here are the 5 key tax rules that will be a talking point today:

Exemption Limit

One of the primary expectations from Budget 2024 is a possible hike in the exemption limit. Under the new tax regime, those earning under Rs 3 lakh a year are exempt from paying tax. There is speculation that this limit could be raised to Rs 5 lakh in Budget 2024, to ease the tax burden on a significant number of Indians.  

Changes In Tax Slabs

Nirmala Sitharaman hasn't announced any changes to the income tax slabs in the last three Budgets. There is now a strong possibility that the tax slabs in the current regime will be rationalised. Some experts have said called 20 per cent tax rate for individuals earning between Rs 12-15 lakh annually steep and have called for a reevaluation. There are also calls to apply a 30% tax rate solely to those earning Rs 30 lakh per year and adjust rates for income brackets in between seeks to inject fairness into the tax system.

Standard Deduction

Another highly anticipated change is an increase in the standard deduction, presently capped at Rs 50,000. Industry experts are speculating that this figure could potentially double to Rs 1,00,000, offering substantial relief and reducing tax liabilities for salaried individuals.

Capital Gains Tax Reforms

Indian financial markets, corporates, and entrepreneurs have various expectations from the government. Many have voiced their requests and made presentations before the government as part of pre-budget consultations. Retail investors are keenly watching for any modifications that could influence market dynamics significantly.

Overall Tax Relief Strategy

Overall, the overarching expectation from Budget 2024 is a comprehensive strategy aimed at delivering tax relief while fortifying the economic landscape. The government's approach is likely to emphasise bolstering consumer spending, maintaining fiscal prudence, and investing in critical sectors such as infrastructure to stimulate growth.

The Modi government has put a lot of focus on developing infrastructure. The government's planned capital expenditure (capex) is at Rs 11.1 lakh crore, higher than Rs 9.5 lakh crore in the last fiscal. The government has been pushing infrastructure creation and also incentivising states to step up capex.