Budget 2024: Double Standard Deduction and Other Expectations
In Budget 2024, India’s Finance Minister Nirmala Sitharaman prepares to present the Union Budget on July 23, 2024, several key expectations have emerged that aim to benefit the common man. Among these, consultancy firm KPMG has highlighted the need to double the standard deduction to Rs 1 lakh from the current Rs 50,000.
According to KPMG, the significant rise in medical expenses, fuel costs, and overall inflation necessitates an increase in the standard deduction. This adjustment would help alleviate the financial burden on individuals by increasing their net disposable income, which could then be spent on consumer goods or saved for future needs.
Budget 2024: Enhancing Tax Exemption Limits
Another popular expectation is the increase in the basic tax exemption limit under the new default tax regime. KPMG suggests raising this limit to Rs 5 lakh from the current Rs 3 lakh. Such a change would provide additional relief to taxpayers and potentially stimulate economic activity by increasing disposable income.
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FM Nirmala Sitharaman: Expectations on Home Loans
The real estate sector faces mounting pressure due to recent hikes in interest rates and regulatory reforms. To address these challenges and promote home ownership, it is suggested that the government reconsider allowing deductions for interest on self-occupied housing loans under the new tax regime or enhance the deduction in the old tax regime to at least Rs 3 lakh. This measure would support homebuyers and potentially boost the real estate market.
KPMG highlights the complexity of the current capital gains tax structure in India, which has differential rates for various types of assets and varying holding periods for assets to qualify as long-term. For instance, the holding period for listed equity shares is 12 months, for real estate, it is 24 months, and for debt instruments, it is 36 months. Simplifying this structure by providing a more uniform capital gains tax regime would align with the government’s objective of simplifying the tax system.
Aligning Custom Rates with Industrial Policy
From a customs standpoint, there is an expectation for the government to continue aligning tariff rate changes with the industrial policy objective of encouraging deeper value addition in India. This would involve coordinating changes in customs tariff rates with the rollout of technical trade barriers. Such measures would support domestic industries and promote economic growth.
As Nirmala Sitharaman prepares to present Budget 2024, key expectations include doubling the standard deduction, increasing the basic tax exemption limit, and simplifying the capital gains tax structure. Additionally, addressing the pressures on the real estate sector and aligning customs rates with industrial policy objectives are crucial measures that could significantly benefit the economy. These proposals reflect the needs and aspirations of the common man, aiming to provide financial relief and stimulate economic activity.
