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Interim Budget 2024 Announcements to expect

09 Feb 2024

Introduction

Finance Minister Nirmala Sitharaman will present an interim budget on February 1, 2024. Since it is the year of the Lok Sabha elections, it wouldn’t be a typical full-fledged one. You can expect it to feature measures with mass appeal, such as subsidies or tax reductions. However, the announcement of major schemes is unlikely. 

Before you read about the announcements to expect from the upcoming budget, it is vital to understand what an interim budget means.

What is an interim budget?

The government presents the interim budget in the Parliament when elections are approaching or when there isn’t sufficient time to disclose a full budget. Generally, the newly elected government prepares the budget for the complete financial year.

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The interim budget covers the government’s basic expenses and ongoing programs. It does not include major tax reforms or policy changes.

What should you expect?

The interim budget is expected to focus on covering the government’s fiscal deficit targets and expenditure demands until the election of the new government. Finance Minister Nirmala Sitharaman has also given similar indications. But taxpayers hope for announcements and potential relief in personal income tax, especially in the new tax regime

The top expectations to have from the Interim Budget 2024 are as follows:

1. 80D deduction limit

Section 80D allows a deduction limit of Rs. 25,000 for individuals and Rs. 50,000 for senior citizens on medical insurance premiums. Considering the rising healthcare costs, this should increase to Rs. 50,000 for individuals and Rs. 75,000 for senior citizens. Moreover, the new tax regime should incorporate Section 80D benefits to promote equitable access to healthcare. 

2. Basic exemption limit

There should be an increase in the basic exemption limit in the old and new tax regimes from the perspective of high inflation. This increase can lower the tax liability across slabs. Experts expect an increase of another Rs. 50,000 in the basic exemption limit in old and new regimes. 

3. Simplification of capital gains taxation

Many investors struggle with the complex calculations of the current capital gains tax regime. You have to consider several factors, like residency status, asset classes, holding periods, and tax rates. You can expect the government to simplify capital gains taxation by unifying tax treatment for listed and unlisted securities, streamlining the classification of equity and debt instruments, and simplifying indexation clauses. 

4. Ease Tax Deducted at Source (TDS) compliance for home buyers

If you buy a property whose value exceeds Rs. 50 lakh, you deduct TDS at 1%. This provision applies to residential and commercial properties. While resident sellers can use Form 26QB to complete the process with ease, the complexities are higher for Non-Resident Indian (NRI) sellers. The Interim Budget 2024 is expected to make this clause clearer for NRIs. 

5. Goods and Services Tax (GST)

Generally, GST laws are discussed in GST Council meetings. However, the interim budget is expected to focus on two significant aspects of GST

6. Revised annual GST return form

The introduction of this form enables taxpayers to correct errors in the GSTR-9 form, especially for Business-to-Business (B2B) transactions. The objective of this move is to avoid unwarranted scrutiny by tax officers because of mistakes in the returns filed originally. 

7. Reverse charge-based mechanism

 A new mechanism for better GST compliance is expected to be introduced. If your turnover is more than Rs. 100 crore or Rs. 500 crore, you can pay GST directly to the government. There is no need to settle transactions with small vendors. This measure aims to lower the compliance burden on small businesses. Moreover, it aims to make dealing with small vendors easier for larger enterprises. 

8. Taxable income

In the 2023-2024 Budget, the income tax rebate limit was raised to Rs. 7 lakh from Rs. 5 lakh in the new tax regime. This time, the taxable income limit is expected to increase further, giving the salaried class a higher take-home salary. 

Bottom line

While the interim budget will not include major announcements, it will shed light on lingering concerns and lay the foundation for future economic growth. Experts expect it to focus on maintaining fiscal stability and avoid populist measures. It will offer valuable insights into the country’s financial health and future priorities. Individuals and businesses should comprehend the budget’s priorities and vision to help in strategic planning and decision-making. 

 

Related Articles on Budget 2024:  Interim budget 2024 stock watchlist | Expect Minimal Changes from Interim Budget 2024 | Full Budget vs. Vote on Account | Vote on Account vs. Interim Budget | Sectors to benefit from interim budget 2024 | Everything about Interim Budget

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