Budget 2024 Expectations: Key Anticipations for Income Tax & GST

• Anticipated increase in Section 80C deduction limit
• Possible tax exemption limit raise under the new tax regime
• Expectations for home loan interest deduction increase
• Key GST amendments including Aadhaar-based biometric authentication
• Anticipated green taxation and incentives for the EV industry

The focus now shifts to the upcoming Union Budget 2024 25 following the reappointment of the NDA government for another successful term. This upcoming budget 2024 is significant for each one of us. That is because it comes at a time when India is at a point between recovery and growth.

As the nation looks forward to the Union Budget 2024-25, anticipation is high regarding potential economic reforms and policy shifts. With the NDA government re-elected, this budget is poised to address key areas of concern for both individuals and businesses. From income tax adjustments to significant changes in GST regulations, the upcoming budget aims to foster economic growth and stability while addressing the needs of various sectors. Let's explore some of the key expectations for the forthcoming budget.

The Union Budget 2024 25, to be announced in the second half of July, is expected to focus significantly on income tax reforms. Let's delve into some budget 2024 expectations:

1. Increase in Section 80C Deduction Limit

The limit of deduction from section 80C is currently ₹1.5 lakhs; this limit has remained the same ever since 2014 but is supposed to be raised up to ₹2 lakhs soon. If this change happens, it means taxpayers will save a lot. They could save on insurance premiums like life insurance , endowment policies, ULIPs , and on Public Provident Funds (PPFs) and fixed deposits . For example, monthly savings at bank rates could be significant.

2. Tax Exemption Limit Increase

The new tax regime is expected to raise the exemption limit from ₹3 lakhs to ₹5 lakhs, providing relief to the salaried class and increasing disposable income, which will boost consumer spending.

3. Higher Deduction for Home Loan Interest

The deduction limit under Section 24(b) , for interest on home loans, is expected to rise from ₹2 lakhs to ₹3 lakhs in order to encourage homeownership. This action is supposed to boost the real estate market and help people secure house values.

4. HRA Exemption for Non-Metro Cities

Currently, HRA exemptions vary based on metro and non-metro cities. The government is expected to reassess these rules, particularly for non-metro cities, where the exemption could be adjusted to 50% of the basic salary, aligning with metro city standards.

5. Social Security Fund

For unorganised and rural workers, Central Trade Unions have promoted a social security fund providing a minimum pension of ₹9,000. If this project were included in the budget, these employees would have a major safety net.

6 . Green Energy and Taxation Initiatives

India's climate goals have sparked high expectations for green taxation initiatives. A carbon tax on high-emission industries could be introduced to encourage cleaner technologies and fund sustainable projects. Additionally, tax incentives for investments in renewable energy, energy-efficient technologies, and sustainable practices are eagerly anticipated. Also Read : Income Tax Return - ITR Filing, Types, Process and Forms

Under Finance Minister Nirmala Sitharaman, the 53rd GST Council meeting set for June 22, 2024, concentrated on various important modifications. These are the main hopes for GST changes this union budget 2024 25:

1. Aadhaar-Based Biometric Authentication

Aadhaar-based biometric authentication is supposed to be mandatory in order to reduce bogus input tax credit claims. This action seeks to increase GST system integrity and lower the generation of false invoices.

2. GST on Petrol and Diesel

Bringing fuel and diesel under the GST system is still hotly contested. Although opinions across states are still developing, including these fuels under GST could help to standardise tax rates and maybe cut fuel prices.

3. GST Exemption for Railway Services

The GST Council has suggested exempting platform tickets from GST, a step meant to lower passenger travel expenses. This exemption fits attempts to make travel more reasonably priced.

4. Extended GSTR-4 Filing Deadline

The due date for submitting GSTR-4 has been extended from April 30th to June 30th, 2024, as a respite for small taxpayers. This extension lessens small enterprises' load and gives more time for compliance.

5. Interest and Penalty Waiver

For cases not involving fraud, suppression, or misstatement, the GST Council has decided to waive interest and penalties. This applies to demand notices issued under Section 73 of the CGST Act, offering relief to compliant taxpayers.

6. GST Exemption for Hostel Services

Hostel accommodation outside of universities, costing up to ₹20,000 per person monthly, is proposed to be exempt from GST. This action seeks to increase the affordability of hostel lodgings for non-students.

7. Reduction of GST Rate on Carton Boxes and Milk Cans

To reduce consumers’ and businesses’ costs, the GST rate for carton boxes and milk cans is to be cut down from 18% to 12% . It is aimed at simplifying compliance and reducing costs by levying a uniform tax rate on all, regardless of material.

8 Boost to the EV Industry

There's a lot of excitement about the benefits of the electric vehicle (EV) industry. Even though it's still new, the EV sector has huge growth potential. Right now, EVs have a GST rate of 5 per cent. People are hoping for lower taxes on key parts like batteries and components to help the industry grow even faster. Also Read: Belated Return: Section 139(4), Penalty, How to File Income Tax Return After Due Date?

India is looking forward to the Union Budget 2024 25. The Union Budget is our annual planning tool as well as an indicator of our financial stability! Besides this, there are various other aspects, such as income tax proposals or increases in goods & service tax rates (GST) that will be anchored by the budget 2024. Surprisingly, these small reforms, if discussed in the budget 2024, can still lead to great changes because they contribute directly to the nation's economic growth, which in turn affects the global market. We should give credit where it's due, despite challenges like global competition and recession influenced by the protectionist policies of developed countries.