Synopsis
 

Budget 2024 Income Tax Expectations: Finance minister Nirmala Sitharaman is set present the Union Budget 2024 on July 23, 2024. Middle class taxpayers are eagerly waiting for some significant tax relief from Sitharaman in her first budget in Modi 3.0. A hike in the standard deduction limit, a hike basic tax exemption limit in the new income tax regime, and simplified capital gain tax regimes are some of the demands of Indian income taxpayers. Will FM finally make taxpayers happy in Budget 2024?

Budget 2024 Income Tax Expectations: Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on July 23, 2024. This is going to be the first Budget of the National Democratic Alliance (NDA) after they won the Lok Sabha Elections 2024. Hopes are high that Sitharaman will announce some much-needed tax reliefs for middle-class taxpayers. A hike in the standard deduction limit, a hike basic tax exemption limit in the new income tax regime, and simplified capital gain tax regimes are some of the demands of Indian income taxpayers.

What common man want from the Budget 2024
 

1) Hike in standard deduction limit
 

CA (Dr.) Suresh Surana says, "Currently the limit for claiming standard deduction from salary is Rs 50,000 or the amount of salary (whichever is lower). This deduction is provided to cover expenses incurred during employment, excluding professional tax. It is pertinent to note that several expenses incurred by employees during their jobs are not deductible under current provisions. Additionally, the exemptions available to the salaried under Section 10 are capped at outdated limits that fail to account for inflation, rendering them ineffective. Thus, to address this, it is expected that such standard deduction limit be increased and should be adjusted annually in line with the Cost Inflation Index (CII). This would ease the tax burden on salaried individuals and maintain their purchasing power amidst inflationary pressures."
 

2) Hike basic tax exemption limit in the new income tax regime
 

Yogesh Kale, Executive Director, of Nangia Andersen LLP says, "Since the new tax regime is now the default scheme, the government is already making efforts towards keeping or shifting individuals from the old tax regime to the new tax regime. Considering this, the government may allow some common deductions (which are currently available only under the old tax regime), for example, tax saving investments or medical insurance premiums, etc."
 

"It is anticipated that the government may raise the income tax exemption limit to Rs 5 lakh from the current Rs 3 lakh limit under the new tax regime in the upcoming Budget 2024. The new tax regime is the default tax regime now. However, there are a lot of employees opting for the old tax regime to avail of HRA exemptions, 80C deductions, etc. For the benefit of all, it is expected that the increase in income tax exemption limit in the new tax regime is extended to people opting for the old tax regime as well which is at par with the new tax regime. Similarly, increasing the standard deduction from the current level of Rs 50,000 would also help," says Aarti Raote, Partner, Deloitte India.
 

3) Simplify capital gains tax
 

Union Budget 2024 should simplify the capital gains tax system by introducing a more rationalised tax structure, said experts.
 

"To simplify capital gains taxation, capital assets could be categorised in a maximum of two to three categories and tax rates could be made uniform across these categories, thus reducing the disparity that exists in tax rates for similar asset classes," experts add.