Union Budget 2024 Highlights:

  • No alterations in direct and indirect taxation have been proposed.
  • Tax benefits for startups, investments made by sovereign wealth, and pension funds are to be extended to March 2025.
  • Continuation of tax exemption for select IFSC (International Financial Services Centre) units until 31st March 2025.
  • Proposal to withdraw outstanding direct tax demands:
    1. For amounts up to Rs.25,000 incurred between FY1962-63 and FY2009-2010.
    2. For amounts up to Rs.10,000 incurred between FY2010-11 and FY2014-2015.
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Pre-Budget Expected Amendments 2024

Union Finance Minister Nirmala Sitharaman will present the interim budget on February 1, 2024. The full Budget for the fiscal year 2024-25 will be introduced after the formation of the new government following the general elections. Here are a few expectations related to the Income Tax Changes:

Increase Home Loan Deduction (Sec 24(b)):

  • Rationale: Property prices have risen significantly in the past five years, making it challenging for buyers to cover interest payments with the current deduction limit of Rs 2 lakh on a self-occupied property.
  • Expectation: Increase the home loan deduction limit to at least Rs 3 lakh, irrespective of the property's price.

Increase NPS Investment Deduction and Tax-Free Withdrawal:

  • Rationale: The existing Section 80C limit of ₹150,000 is insufficient for many taxpayers to save tax, and there's a need to encourage long-term investing.
  • Expectation: Increase the additional deduction limit for NPS investments from ₹50,000 to ₹100,000 and make NPS withdrawals completely tax-free (EEE - Exempt Exempt Exempt).

Increase Section 80C Threshold:

  • Rationale: The current limit of Rs. 1.5 lakh under Section 80C restricts the benefit of various tax-saving investments.
  • Expectation: Enhance the maximum deduction limit under Section 80C to at least Rs. 2.5 lakhs to provide more room for tax-saving investments.

LTCG Tax on Equities:

  • Rationale: The reintroduction of LTCG tax has negatively impacted investor confidence, and it's suggested to exempt long-term capital gains on the sale of Indian-listed equity shares.
  • Expectation: Eliminate LTCG tax on equity shares or provide exemption for investors holding securities for more than two years.

Increase Standard Deduction:

  • Rationale: The standard deduction of Rs. 50,000 may not be sufficient to cover increased expenses due to inflation and the hybrid working model.
  • Expectation: Increase the standard deduction to Rs. 1,00,000, and consider a higher limit for army personnel.

Reduction in Litigation:

  • Rationale: Acknowledging the high level of litigation, the government may take steps to reduce the pendency of disputed cases.
  • Expectation: Measures to streamline and expedite the resolution of tax disputes, potentially through reforms in the dispute resolution mechanisms.

Addressing Refund Delays and TDS Credit:

  • Rationale: Taxpayers often face delays in receiving refunds and issues related to TDS credit.
  • Expectation: The government may explore solutions to expedite refund processes and enhance the interface with the Central Processing Centre to address challenges related to TDS credit.

Simplified Capital Gains Tax Structure:

  • Rationale: The complexity of the capital gains tax structure, including varying rates and holding periods for different instruments within the same asset class.
  • Expectation: The government may signal a move towards a more straightforward and consistent capital gains tax regime, potentially addressing issues related to tax rates, holding periods, and indexation benefits.

Reduced TDS for Professionals:

  • Rationale: Professionals and technical service providers currently face a 10% TDS on fees, leading to lock-in of funds that are eventually refunded upon filing returns.
  • Expectation: The Budget may propose a reduction in TDS for professionals, aiming to ease the financial burden and administrative hassles, possibly bringing it down to 5%.

FAQs on Budget 2024

Q- When the budget will be presented in 2024?

Finance Minister Nirmala Sitharaman will present the budget for the financial year 2024-2025 on 1 February 2024, Thursday, at 11:00 am. You can view the real-time exhibit of the interim budget offered by Nirmala Sitharaman here.

Q- Who prepares the Union budget?

The budget is a detailed planning allocation of economic resources of the country for the upcoming fiscal year. Since it has a major impact on all sectors, the budget is prepared in harmony with different ministries. Recommendations from all the ministries are submitted to the finance ministry for their demands, which are further analyzed by the budget division.

Q- Who will introduce Budget 2024-25?

Budget 2024 will be introduced by the Hon’ble Finance Minister Nirmala Sitharaman before the Parliament of India on 1st Feb 2024.

Q- What is the Interim Budget?

The interim Budget is presented by the ruling government when elections are due in the fiscal year. Hence, the ruling government cannot make strategic decisions for the complete fiscal year in which it might or might not have the ruling powers. The last Interim Budget was presented in 2019 by acting Finance Minister Piyush Goyal.