Budget 2024 Expectations: Salaried individuals have not received any additional relief in the form of a standard deduction, as it has remained unchanged for all individuals, regardless of their income levels.
The upcoming Interim Budget 2024, scheduled to be presented in Parliament on February 1, is eagerly anticipated by taxpayers who hope for some relief in income tax. There are expectations of an increase in the standard deduction in the forthcoming interim budget.
Also Read: Budget 2024 Expectations Income Tax Rebate
The standard deduction underwent its last revision in 2019, coinciding with an interim budget. However, the most recent Budget in 2023 extended this benefit to the new tax regime as well. Presently, a standard deduction of Rs 50,000 is permissible.
Budget 2024 Expectations For Salaried Employees
The standard deduction serves as a uniform tax relief for individuals receiving a salary. It represents the amount subtracted from the gross annual salary, consequently reducing the tax liability. To illustrate, if an individual’s annual salary is Rs 7,50,000, a deduction of Rs 50,000 is applied, and the tax is then computed based on the remaining amount (Rs 7,00,000).
Experts feel an amendment can be proposed for the application of standard deduction as a percentage of an individual’s salary income, ensuring fair and equal benefits for all employed individuals.
Anand Rathi Advisors Limited (ARAL), the investment consultants, came up with a comprehensive and exclusive report that gives an overview of the impact of tax on household consumption.
The report largely covers detailed insights highlighting the impact of taxation on consumption patterns in India and recommendations to alleviate the tax burden on the middle class.
Budget 2024 Expectations Income Tax
Key highlights of the research findings –
1. Growing Consumer Population
2. Favourable Demographics with increasing Household Saving
- There has been a significant rise of retail participation in the capital markets with total demat growing at 29% CAGR backed by internet penetration, increased financial awareness among the youth to invest in yielding asset
- The volume of equity traded in the secondary market also saw a meaningful increase reaching record high levels as of Financial Year 2022 at 923 billion traded quantities;
3. Need for Increase in Standard Deduction for salaried taxpayers
- An enhanced standard deduction would provide tax relief to individuals in the middle and lower-income groups who may not have access to various tax-saving investments and deductions which will reduce the tax burden on these segments of the population
Samir Bahl, CEO – investment banking, Anand Rathi Advisors, said, “As we navigate the current economic landscape in India, we strongly believe that an increase in the standard deduction is imperative to alleviate the financial strain imposed by the rising cost of living. The steady inflation and other economic factors have significantly elevated our day-to-day expenses, making it challenging for many of us to make ends meet. By increasing the standard deduction, the government can provide much-needed relief to taxpayers.”
Atul Thakkar, director – investment banking, Anand Rathi Advisors, said, “Standard deduction has remained largely stagnant from FY 2004-05 to FY 2022-23 leading to minimal savings in taxable income for salaried individuals. An increase in standard deductions will lead to increased spending and consumption which will indirectly increase GST revenue for the government. In our humble opinion, we propose that standard deduction should be considered as a percentage of total income from salary.”
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