Budget 2024 Expectations: Income tax rebate to home loan tax exemption. What ‘aam aadmi’ expects from FM Sitharaman

Budget 2024 Expectations: Union Finance Minister Nirmala Sitharaman is set to present the Budget for the financial year 2024-25 in the Lok Sabha on July 23. As the Union Finance Minister prepares to present the Budget 2024, expectations are high across various sectors. The focus remains on potential tax reforms that could impact individuals and businesses. Key anticipated changes include an increase in the basic exemption limit. Furthermore, there is speculation about raising the standard deduction limit.

Income tax rates are expected to be rationalised in addition to revising income tax slabs to enhance disposable income and stimulate consumer spending. However, it's unlikely that significant changes will be made to the old tax regime.

The government's anticipated focus on simplifying the tax structure and enhancing compliance could include reduced corporate tax rates for SMEs, incentives for skill development, and digital infrastructure investments.

Tax-related changes

According to Sandeep Agrawal, Director and Co-Founder of Teamlease Regtech, significant changes were witnessed in the tax structure during the 2023 budget. Looking ahead, while major overhauls may not be imminent, Agrawal anticipates announcements aimed at improving the Ease of Doing Business (EoDB), consolidating the tax system for stability, and progressing towards the implementation of the Direct Tax Code. Drawing parallels with the GST's impact on indirect taxation, Agrawal expects the Direct Tax Code to simplify the tax structure and alleviate the tax burden.

Raise limits for each slab in the new tax regime

Sandeep Agrawal advocates for enhancing the slab limits in the new tax regime within the upcoming budget to alleviate tax liabilities for the middle class. Agrawal also sees raising the rebate limit in the 2024 budget as a strategic move to encourage taxpayers to transition to the new regime.

Income tax rebate

Kumarmangalam Vijay, Partner at JSA Advocates and Solicitors, predicts minimal changes to ongoing tax rates, suggesting potential tax rate increases for gains from property transactions, delivery of shares, and F&O trading to curb property speculation and stock market volatility. He highlights the possibility of raising basic slab rates or standard deduction limits in response to prevailing food inflation. Additionally, Vijay underscores the long-awaited need for a tax-neutral regime for LLP mergers and demergers.

Single tax regime

Shravan Shetty, managing director at Primus Partners, advocates simplifying taxation by introducing a unified tax regime without exceptions. He emphasises exploring alternative methods to incentivize home loans and National Pension System (NPS) investments. He proposes a streamlined process for integrating tax benefits with EMI or NPS payments, facilitating automatic linkage to tax returns. Shetty envisions a unified tax platform that simplifies tax filing for salaried taxpayers, streamlining calculations and payment processes akin to routine bill payments.

Home loan tax exemption

Atul Monga, CEO and Co-Founder of Basic Home Loan, calls for increasing the tax rebate on home loan interest under Section 24 of the Income Tax Act from ₹2 lakh to ₹5 lakh to stimulate demand for budget homes amidst post-pandemic sales declines.

Reduced corporate tax rates for SMEs

Kuljeet Singh, Director of Finance and Accounts at GI Group Holding, anticipates reduced corporate tax rates for Small and Medium Enterprises (SMEs) to bolster investment. He also expects a simplified Goods and Services Tax (GST) structure with fewer tax slabs and lower rates on essential goods and services, aimed at enhancing compliance and reducing the overall tax burden on businesses.

These perspectives underscore the diverse expectations and calls for reform within India's tax regime as stakeholders await the Union Budget 2024 announcement.

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