The Union Budget 2024 is to be presented by Finance Minister Nirmala Sitharaman on February 1, 2024, and is anticipated to be an “Interim Budget” which means a temporary budget or trial budget until the general elections, ruling out any significant announcements. This interim budget is going to address tax deductions, changes in tax slab, capital gain, TDS compliance for home buyers, infrastructure investment, fiscal deficit, etc. The full budget is expected to be presented in July after the new government comes to power. In this blog, we will walk you through the key highlights that are going to be discussed in the Union Budget of 2024.
Tax Slabs |
Tax Rate |
Upto 3 Lacs |
NIL |
Rs. 3-6 Lacs |
5% |
Rs. 6-9 Lacs |
10% |
Rs. 9-12 Lacs |
15% |
Rs. 12-15 Lacs |
20% |
Rs. 15 Lacs and above |
30% |
The Interim Budget 2024 is expected to focus on streamlining Customs law compliance rather than GST law. While the GST Council meetings predominantly address GST law, there may be amendments to the Central GST Act to align with recently passed GST Rules.
In the upcoming budget, a revised annual GST return form is expected to be introduced, allowing taxpayers to rectify errors in the GSTR-9 form, particularly for B2B transactions. This measure will aim to prevent unnecessary scrutiny by tax officers due to errors in the originally filed returns.
A new reverse charge-based mechanism will be implemented for better GST compliance. Buyers who are large taxpayers with turnovers exceeding Rs.100 crore or Rs.500 crore will be able to directly pay GST dues to the government instead of their small vendors.
The current capital gains tax regime is complex and poses challenges for investors due to various factors such as asset classes, holding periods, tax rates, and residency status. To simplify this process, the government should streamline the classification of equity and debt instruments, unify tax treatment for listed and unlisted securities, and simplify indexation provisions.
Despite being recognized as a metro city by the Indian Constitution, Bengaluru is classified as a non-metro for income tax purposes. This classification limits the House Rent Allowance (HRA) deductions for Bengaluru residents to 40% instead of the 50% available in other metro cities. To rectify this discrepancy, Bengaluru should be considered a metro city for HRA exemption purposes. This adjustment would ensure that Bengaluru residents receive the same HRA benefits as residents of other metro cities and provide them with the necessary financial support for their housing expenses.
Budget 2024 is expected to bring about significant changes in the fiscal deficit. It is projected to be lower than the previous year’s target of 5.9 % of GDP. Additionally, estimates for FY25 indicate that the fiscal deficit will range between 5.4-5.5 % of GDP. However, these estimates are contingent upon the government’s ability to increase revenue and effectively control subsidy provisions.
In conclusion, these are the expectations from different sectors. This time the Union Budget is going to focus on individuals and rural areas rather than companies. As the interim budget, it may not include spectacular announcements, but it will offer valuable insights into the government’s economic priorities and strategies like tax slabs, tax deductions in medical expenses under Section 80G, fiscal deficit etc.
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