FM Nirmala Sitharaman will present Budget 2024 on February 1, 2024 as part of the Parliament’s Budget session.Ahead of the Union Budget 2024, Times of India Online surveyed 10 economists and experts on their major expectations from the budget.
Asked whether there is a scope to provide income tax relief for the common man and middle class, the economists and experts were divided.
Budget 2024 income tax changes: The Case For Income Tax Relief
DK Srivastava, Chief Policy Advisor, EY India says that some relief on the personal income tax front is expected. “This could be in the form of a hike in Section 80C limits, income tax slab adjustments and a push to residential housing purchases or construction,” DK Srivastava told TOI.
Also Read | Budget 2024 Expectations Live Updates: Income tax slabs, new income tax regime, jobs, infrastructure capex in focus
An economist at an industry body who did not wish to be named said there is scope to provide income tax relief. “Currently, under the new tax regime, incomes above Rs 15 lakhs are being covered under the highest tax slab. To boost private consumption expenditure, it is suggested that this threshold be raised to at least Rs 20 lakhs,” the economist said.
Ranen Banerjee, Partner and Leader, Economic Advisory Services Government Sector Leader, PwC India believes that there is clearly a need for providing higher standard deductions. “This will help tax paying households cope with the inflationary increases. This could further incentivise people to move to the new tax regime,” he said.
Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers states that the growth in personal income tax has been significant post pandemic and the increase in taxpayer base over the years shows the compliance measures are paying fruit. “As revenue collection growth remains strong owing to the robust economic performance and also higher collections of GST, the government may find space to increase the tax slab levels,” he said.
Also Read | Budget 2024: Why standard deduction for salaried taxpayers needs to be hiked
Hajra adds that the new income tax regime is viewed as disincentivizing savings as those deductions on investments available in the old tax regime do not apply to those who opted for the new tax regime. “In order to incentivize savings and also make the new tax regime attractive, certain savings and payments can be allowed towards deductions,” he told TOI.
Yuvika Singhal, Economist at QuantEco Research believes that the government should aim to increase the acceptance of the new income tax regime. She recommends the following:
- Aim at increasing the Increase in standard deduction
- Enhance 80D limit for health insurance, and allow deduction under new scheme
- Extend deduction for interest on housing loans for the new tax regime
Interim Budget income tax changes unlikely?
Madan Sabnavis, Chief Economist at Bank of Baroda tells TOI that there is not much scope with the government to make changes in income tax. He also says that people need to shift to the new income tax regime. Radhika Rao, Senior Economist at DBS Bank concurs that substantial changes to the income tax structure are unlikely.
Also Read | Budget 2024 income tax: Why Rs 20 lakh and not Rs 15 lakh should be the new threshold for 30% tax rate
Indranil Pan, Chief Economist at Yes Bank says that since there is “no problem with urban consumption”, income tax relief is unlikely to help. Sachchidanand Shukla, Group Chief Economist at Larsen & Toubro advocated revamping the Direct Tax Code instead of bringing in adhoc income tax rate changes etc.
All eyes are now on Finance Minister Nirmala Sitharaman’s Interim Budget 2024 as common man, middle class and salaried taxpayers look to the government to provide income tax relief.
