Budget 2024 Expectations: Top 7 Expectations from Union Budget

After the Lok Sabha Elections 2024 concluded and the National Democratic Alliance (NDA) secured the third consecutive term at the Centre (Modi 3.0), President Droupadi Murmu has  approved for the Budget 2024 to be held on 23rd July 2024. This budget is most likely to prioritise economic growth without heightening the inflation graph and bring equitable development in infrastructure, defence, railways, accelerate renewable energy and others.

This article focuses on the 2024 budget expectations that are to be announced.

Update on Budget Expectations:

Latest update on the Budget expects

1. Technological Advancements in Manufacturing sector
2. Cybersecurity measures to be improved as rise in cyber crime.
3. Fintech Sector is targeted to  foster financial inclusion and forecasting fuel innovation 
4. Education sector is expected to emphasis digital literacy, research programes, equitable access to quality education.
5. Subsidies to avail home loans easily
6. EV owners can expect tax incentives

Expected Date of Budget 2024 

Budget 2024 UPDATE: Official announcement has been released by the government, Budget 2024 for FY 2024-25 is held on 23rd July.

The Budget session of Parliament will begin from July 22, 2024, and continue until August 12, 2024. Several pre-budget consultations are expected to take place on July 20, 2024, with industry leaders and finance ministers of different states. 

Meanwhile, the 53rd GST Council recommended amendments on June 22, 2024.

A. Income Tax:

Budget 2024, is expected to make pleasing announcements in favour of salaried individuals. Here are our top expectations,

1. 80C Deduction Limit

The deduction limit for Section 80C for any investment made on life insurance premium, contribution to PPF, FD, ELSS etc. It is expected that the limit for Section 80C will be raised to Rs 2 lakhs from Rs 1.5 lakh. This has been not changed since 2014 and revising the limit will be a relief for taxpayers. 

2. Increase Tax Exemption Limit

There are expectations that under the new tax regime the tax exemption limit will be increased to Rs 5 lakhs from Rs 3 lakhs. However, the government priorities, economic growth and several other factors are considered to raise the exemption limit. 

3. Increase in Interest on Home Loan

As a part of promoting homeownership, it is expected that deduction under section 24(b) for deduction on interest on home loan of Rs 2 lakhs will be increased to Rs 3 lakhs. 

This is said to increase the chances of individuals buying residential property, which will also help grow the real estate sector and boost personal finance.

4. 50% HRA on Non-Metro Cities

Salaried individuals receive HRA exemption as an allowance, however, it is exempt only under the old tax regime (optional regime). Exemptions allowed depend on whether they reside in a metro or non-metro city. HRA is exempt is usually the lowest of the following;

1. Actual HRA received
2. Rent paid minus 10% of basic salary 
3. 50% (metro city) of basic salary or 40% (non-metro cities) of basic salary

However, metro cities like Chennai, Delhi, Mumbai and Kolkata are only included for 50% under the Income Tax Act, and the rest of them come under the 40% category. 

The government is expected to reassess the rules for claiming HRA in this Union Budget of 2024, with more people relocating to metro cities.

5. Social Security Fund

Central Trade Unions have presented their memorandum to set up a fund for a social security scheme providing a minimum pension of Rs 9,000 for unorganised and agricultural workers. It is also expected to re-establish the Old pension scheme (OPS).

6. LTCG on Equity Investments

In the Modi 3.0 budget 2024, expectations from taxpayer are high regarding the change in Long term capital gain (LTCG) for equity investments made. The long term capital gain tax was reintroduced in 2018, but you can expect changes in the same under this union budget 2024.

7. Increase in Interest Deduction Limit on Home Loan

To promote homeownership, the government could raise the interest deduction limit under Section 24(b) from Rs. 2,00,000 to Rs. 3,00,000. This adjustment would offer enhanced incentives for buying residential properties, benefiting individual finances and bolstering the overall real estate sector.

B. GST

The Union Budget presentation is largely focused on Income Tax and Customs law changes. However, we can expect some long-standing amendments to the CGST Act and IGST Act.

However, on June 22, 2024, the 53rd GST Council meeting was held by Nirmala Sitharaman and other finance ministers, which focused on the following key amendments. Soon after the Budget, the GST Council is expected to meet once again on rate rationalisation matters.

1. Aadhaar- Based Biometric Authentication

To defeat the possibility of fraudulent claim of input tax credit, by issuing fake invoices Aadhaar based biometric authentication was introduced by the 53rd GST Council Committee. This is expected to reduce the fraudulent input tax claims.

2. GST on Petrol and Diesel

It is expected that in the budget 2024, petrol and diesel might come under the purview of GST. There is pending concord among the states regarding the GST rates applicable.

3. Railway Services 

GST council has exempted the tax burden on platform tickets, this is a step forward to reduce the tax paid by the passengers during the journey and to make this affordable.

4. Extended GSTR-4 Filing 

As a relief for small taxpayers, due date for filing GSTR 4 was extended from April 30th to June 30, 2024. 

5. Interest and Penalty Waiver 

For cases not involving any frauds, suppressions and misstatements, GST Council have decided to waiver the interest and penalty. This will be applicable only for the demand notices received under section 73 of the CGST Act.

6. GST Exemption on Hostel 

There is a exemption on the services that is provided by the hostel outside the educational institutions up to Rs 20,000 per person per month. Finance Minister have brought this into purview to make hostel accommodation affordable for non-students.

7. Reduction of Rate to 12%

As a part of reducing the overall cost on both consumers and manufacturers, there is reduction in the GST paid on carton boxes from 18% to 12%. 

Same is with milk cans, despite the material the cans are made there is a uniform tax rate applicable. 

Related Articles:

1.  Budget 2024 Highlights
2.  Budget 2023 Highlights: PDF Download, Key Takeaways, Important Points
3.  Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)
4.  Old vs New Tax Regime: Which Is Better?
5.  New Tax Regime 2024