FM Nirmala Sitharaman Presents the Economic Survey, Focus on Income Tax Updates and Record Capital Expenditure on Roads and Railways

On Monday, the first day of the budget session, Finance Minister Nirmala Sitharaman delivered the Economic Survey 2023–24 in Parliament. The Economic Survey is anticipated to give Budget 2024 guidance. FM Sitharaman will present the Union Budget 2024 to Parliament on July 23, 2024. The newly elected NDA government, led by Prime Minister Narendra Modi, will present its first budget this year.

Experts have expressed the need for the government to raise the exemption limit in the new tax regime to Rs 5 lakh, which would be a significant tax relief measure included in Budget 2024. Presently, taxpayers must decide between the concessional tax system, which offers lower tax rates but restricts tax-saving options, and the old income tax system, which includes deductions and exemptions. Although most taxpayers benefit from lower tax rates under the concessional tax regime, individuals making more than Rs 15 lakh have considerable obstacles to overcome.

Currently, both regimes impose a 30% tax rate on income exceeding Rs 15 lakh. This, combined with the new regime's elimination of the majority of exemptions and deductions, means that this group of taxpayers will pay a larger effective tax burden. Because of this, taxpayers in this bracket are increasingly in agreement that the current tax rates do not fairly account for the costs and complications brought on by rising incomes and inflation.

In light of the NDA's lower-than-expected victory in the 2024 Lok Sabha elections, the Union Budget is probably going to balance reforms and populism. The common man, middle class, and salaried people have high expectations from Budget 2024 to give them relief from income taxes and more disposable income, just like they do every year. Experts anticipate that the new income tax system will become more appealing to individual taxpayers as a result of the changes. In order to keep the fiscal deficit under control, FM Sitharaman is probably going to continue down the fiscal consolidation route. But it's also expected that the Modi 3.0 government will keep up its record-breaking capital expenditure push, with an emphasis on infrastructure.

Recent government budgets have shown a strong preference for the new tax system; in fact, unless taxpayers choose to opt-out, the new system is now the default choice for all of them. The rationale is that a more straightforward tax system is simpler for both tax authorities to enforce and for taxpayers to comply with.