Interim Budget 2024: Expected Tax Implications on Salaried Employees and Business Owners

Like every year in the past, the upcoming Interim Budget for 2024-25 in India is creating a lot of buzz! People are excited about what's in store for our economy and taxes. It is expected that the government is keen on putting more money into education and skill development, which indicates that they're serious about having a skilled and knowledgeable workforce. 

There are also expectations about changing some tax rules to give a break to those in the lower-income bracket. People are anticipating that the economy might get a boost, especially in healthcare and infrastructure. So, it looks like some positive changes might be on the horizon!

Overview of Interim Budget 2024

What is an Interim Budget?

An interim budget is a temporary financial plan for a government. It is often presented before a change, for example an upcoming election. On February 1, 2024, Finance Minister Nirmala Sitharaman will present an interim budget.

The Finance Minister has mentioned that the Interim Budget in February won't have any significant announcements. It's going to be a bit straightforward and not too exciting.

Union Budget 2024: What are the expectations?

Let’s look at some of the sector-wise expectations from Union Budget 2024.

Tax Policies for Salaried Employees:

• Consideration of revising tax exemptions in the lower bracket for the old tax regime.

• Exploring measures to simplify the tax structure and enhance compliance.

• Potential incentives for promoting digital transactions and reducing the burden on taxpayers.

Skill Development for Business Owners:

• Initiatives to enhance skill development programs, aligning with industry needs.

• Increased investments in education infrastructure and technology.

• Potential allocations for research and development in educational institutions.

Healthcare:

• Focus on strengthening the healthcare system in the wake of recent challenges.

• Potential enhancements to 80D deductions for health insurance premiums.

• Investments in healthcare infrastructure and facilities.

Infrastructure:

• Allocations for major infrastructure projects to boost economic growth.

• Emphasis on sustainable and smart city development.

• Initiatives to improve transportation and connectivity across the country.

Agriculture:

• Continued support for farmers through agricultural schemes.

• Investments in irrigation and water management projects.

• Measures to enhance agricultural productivity and income for farmers.

Technology and Innovation:

• Incentives for research and development in emerging technologies.

• Support for startups and innovation hubs.

• Measures to boost digital connectivity and access to technology in rural areas.

Environment and Sustainability:

• Initiatives to promote renewable energy sources.

• Incentives for eco-friendly practices in industries.

• Investments in environmental conservation and climate resilience projects.

Manufacturing and Industry:

• Policies to attract foreign direct investment (FDI) in manufacturing.

• Incentives for domestic industries to promote 'Make in India.'

• Measures to streamline regulatory processes and reduce compliance burden.

Social Welfare:

• Continued focus on social welfare programs.

• Allocations for poverty alleviation and rural development.

• Initiatives to address social inequalities and promote inclusivity.

Historical changes in tax slabs

Back in 2013, the late Pranab Mukherjee set the tax rules with a basic exemption limit of Rs 2 lakhs. Then in 2015, they bumped it up to Rs 2.5 lakhs, and it's stayed the same since. In 2018, they lowered the tax rate from 10% to 5% for folks earning between 2.5 to 5 lakhs. Fast forward to 2019, they introduced a rebate of Rs 12,500 for those making up to 5 lakhs, meaning no tax for them. But here's the catch – if your income crossed 5 lakhs, your tax went up by a whopping Rs 13,000.

In the latest budget for 2023-24, the government brought in a new default tax option called the New Tax Regime. It comes with extra perks, like a full tax rebate of up to Rs 7 lakh. In the old tax system, the most tax returns you could get was capped at Rs 5 lakh. So, with the new tax regime, you get more benefits!

Wrapping up!

The Interim Budget 2024 in India is anticipated to bring positive changes, with a focus on education, skill development, and potential tax revisions for the lower income bracket. The government's emphasis on various sectors such as healthcare, infrastructure, agriculture, technology, and social welfare reflects a holistic approach to economic development. 

As Finance Minister Nirmala Sitharaman hints at a straightforward budget, people eagerly await the details on February 1, 2024, to know the actual impact on their finances and the overall economy.

Frequently Asked Questions

Here are some frequently asked questions about Interim Budget 2024

What is the Union Budget in India?

The Union Budget is an annual financial statement presented by the government, outlining its revenue and expenditure for the upcoming fiscal year. It includes details about taxes, allocations for different sectors, and overall economic policies.

When is the Union Budget presented?

The Union Budget is typically presented on the last working day of February. However, it can vary, and an interim budget may be presented in case of a transition period.

What is the difference between the Interim Budget and the Full Budget?

An Interim Budget is a temporary financial plan presented when the government is in transition, usually during an election year. The Full Budget is presented later, incorporating more comprehensive policies and changes.

How does the Union Budget impact taxes?

The Union Budget often announces changes in tax rates, exemptions, and other related policies. These changes can affect the income tax individuals and businesses pay.

What is the significance of the fiscal deficit mentioned in the Budget?

The fiscal deficit is the difference between the government's total expenditure and its total revenue. It indicates the amount the government needs to borrow. Managing a reasonable fiscal deficit is crucial for economic stability.

How does the Budget affect different sectors like healthcare and education?

The Budget allocates funds to various sectors based on the government's priorities. Increased allocations can indicate a focus on development in those areas.

What are the key components of the Union Budget?

The key components include revenue receipts, capital receipts, expenditure, and the fiscal deficit. It also outlines policies related to taxes, subsidies, and allocations for different sectors.

How can I find information on the Union Budget?

The Finance Minister's budget speech, official government documents, and reliable news sources are good places to get detailed information about the Union Budget.

What is the role of the Economic Survey in the Budget process?

The Economic Survey, presented before the Budget, provides an overview of the economic performance and outlines the challenges and opportunities. It serves as a crucial reference for framing Budget policies.

How can citizens provide feedback or opinions on the Union Budget?

While citizens don't directly contribute to the Budget process, they can share their opinions and expectations through social media, participating in government surveys, or engaging with policymakers during public consultations.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes.