Navigating the 2024 Budget: Impact, Expectations, and Economic Insights

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According to media reports, Finance Minister Nirmala Sitharaman is scheduled to release the Modi 3.0 government’s first Union Budget for fiscal year 2024-25 on July 23rd or 24th. However, there has been no official confirmation of the budget presentation date in Parliament.

As the expected date approaches, the public, industrialists, and economists’ expectations and demands increase. It remains unclear how many of these demands will be implemented into the budget. So let us try and navigate the 2024 budget. 

How is the budget prepared?

Typically, the budgeting process begins in the third quarter of the fiscal year. However, when the country is about to hold an election, the administration proposes an interim budget. Following the election, the newly formed administration delivers the whole union budget to the Lok Sabha.

The budget procedure includes four stages:

  • Estimating expenses and revenues.
  • Creating fiscal deficit estimates
  • Reducing the deficit
  • Presenting and receiving budget approval.

Estimating expenses and revenues

The budget-making process begins with ministries submitting early estimates of planned and unplanned spending. Plan expenditures are addressed with the Planning Commission, which allocates funds for existing and new programs based on finance ministry estimates. 

The ministry’s financial advisors prepare non-plan expenses, which are then consolidated by the expenditure secretary. Budget estimates for the upcoming fiscal year are finalized in the following talks.

The finance ministry must also predict the government’s expected revenue for the fiscal year in order to appropriately analyze the budget.

Developing a fiscal deficit estimate

Once the spending and revenue forecasts are finished, they are compared to establish the estimated revenue shortfall required to cover the country’s expenses. This comparison helps the government determine the least amount of borrowing needed to fund the deficit.

Reducing the deficit

After estimating the fiscal deficit, the government has two options: (1) reduce the deficit by revising tax rates or (2) make changes to expenditure. The ministry usually reduces the cost of plan expenditures.

Presenting and receiving approval for the budget

The Indian Constitution positions Parliament as the ultimate authority on financial issues. Under Article 112, the Union government is required to provide an annual budget, including expected revenue and expenditures to both Houses of Parliament.

When Will the Union Budget 2024 Be Presented?

According to media reports, the Monsoon Session of Parliament is scheduled to begin on July 22 and run until August 9. Experts believe that Union Finance Minister Nirmala Sitharaman will announce the Union Budget on either July 23 or July 24. An official confirmation from the administration on the budget presentation date is still pending.

Union Budget Date 23 July
Who will Present the Budget? Finance Minister Nirmala Sitharaman
Where will the Budget be Presented? Lok Sabha

Budget 2024 Expectations

Finance Minister Nirmala Sitharaman has reduced expectations, suggesting that the February budget will be a bare-bones affair to keep things running till the elections. This entails focusing on necessary expenditures with minimum policy fiddling. However, we foresee the following from the 2024 budget:

Relaxation of ESOP taxation

Startups have begun compensating employees with ESOPs to encourage them to join them. This year, a surge in public startup offerings is projected. As a result, if the government makes ESOP taxation rules more employee-friendly, startups will benefit. Furthermore, this action helps to increase employment in startups.

Increased interest limit on home loans

Currently, the maximum deduction for interest repayment on a loan made to acquire a home (self-occupied) is Rs 2,00,000. This, however, restricts the prospective buyer’s capacity to purchase a house. Most cities have seen considerable increases in property prices, and as a result, interest payments on home loans have risen as well. So, the Rs 2,00,000 ceiling should be considered.

Allowing mortgage interest under the new tax regime

Under the new tax scheme, interest paid on a house loan on rented-out property is deductible; however, this is not the case for self-occupied property. To attract home buyers, the inclusion of home loan interest repayment in the new tax regime is anticipated. Furthermore, it may increase the acceptability of the new tax system.

Increase the cap for 80D deductions.

Increase the Sec 80D limit from 25,000 to 50,000 for ordinary people and 50,000 to 75,000 for senior adults when the premium amount rises.

Including 80D in the new tax regime

Because medical insurance is in high demand, having medical insurance premiums paid as a deduction under the new tax regime will boost coverage and make the new tax regime more acceptable.

Bengaluru is listed as a metro city for HRA exemption

Despite Bengaluru’s constitutional recognition as a metro city, its income tax classification as a non-metro limits HRA deductions to 40%, unlike other metro cities. There is a demand to raise it to 50%.

Option for revising GST returns

Errors in submitted returns can only be corrected in later return periods. We anticipate that return revisions will be permitted; this will benefit both taxpayers and the government by significantly reducing the amount of notices and intimations. GSTN is working on this, and we’ll know more as the government publishes APIs.

E-invoicing for B2C transactions

Extending this rule to B2C transactions would significantly minimize tax avoidance and improve compliance. However, this would imply increasing compliance responsibilities for firms, particularly smaller ones, which may necessitate technical changes to meet these standards.

Budget 2024 expectations: Exemption limit expected to rise from Rs 3 lakh to Rs 5 lakh

According to sources, the exemption amount under the new income tax regime could be enhanced to Rs 5 lakh from Rs 3 lakh currently.

Individuals with incomes greater than Rs 7.5 lakh will profit the most if the government decides to increase the exemption level under the new system from Rs 3 lakh to Rs 5 lakh per year. Modifying tax slabs is likely to reduce the average tax bill by Rs 10,000.

Budget 2024: What Does the Travel & Tourism Industry Want?

Uniform GST rate

Proposes a 12% GST rate for hotels to avoid pricing differences generated by tiered GST rates based on room charges.

Simplified GST registration for OTAs

It is preferred by advocates to allow online travel agents to register through their central head office than state specific registrations, which would lead to reduced administrative costs and on a level playing field with foreign competitors.

Equal GST on e-commerce bookings

Calls for the removal of the GST imbalance, which charges 5% GST for non-AC bus bookings made through e-commerce sites but is exempt for direct bookings.

TCS Credit for Salaried Individuals

Suggests that the Tax Collected at Source (TCS) credit on Overseas Tour Program Packages (OTPP) be applied against income tax from salary.

Corporate investment in tourism through CSR

The encouragement of utilizing CSR funds towards development and improvement of tourism attractions, while providing tax breaks and input tax credits to support sustainable development.

Tax incentives for sustainable practices

It recommends providing tax breaks to hotels and homestays to implement eco-friendly practices, hence boosting India’s commitment to the United Nations Sustainable Development Goals (SDG 11 and SDG 13).

Union Budget Expectations: What Does the Real Estate Sector Expect?

Taxpayers expect policies that will favor them and the economy. They want better tax breaks on housing loans, reduced GST on under-construction properties, and changes in prices of raw materials.

It is crucial to expand affordable housing requirements as well as simplifying corporate practices. Renowned professionals are of the view that the government should re-start programs like Credit Linked Subsidy Scheme (CLSS) and also enhance funding for SWAMIH Fund.

Likewise, they emphasize quick permitting procedures, computerized land records, and incentives for green construction methods for sustainable development in real estate with substantial investment potential.

Budget 2024 Expectations: What the Civil Aviation Industry Wants from the Government

To improve business and reduce taxes, the civil aviation industry is pursuing more favorable policies. It has called for reduction of direct and indirect taxes so that it can be streamlined. These also include the incorporation of aircraft turbine fuel (ATF) under the GST as well as boosting duty- free allowances.

To stimulate domestic manufacturing and innovation, aircraft and drone manufacturers have been requesting incentives and tax advantages. On the other hand, private airport operators are calling for clarity on tax deductions.

Union Budget Expectations: Will these non-metro cities receive a 50% HRA exemption?

One expectation of salaried people is that HRA, which was once exempted from the tax regime in place previously, would be changed in the next budget. Regarding taxes, HRA is a component of employee compensation which allows rent payers to get some relief. Improvements in HRA exemptions might result in substantial financial support for employed taxpayers.

Presently, there is a 50% exemption for rented accommodations in Delhi, Mumbai, Kolkata and Chennai while other parts get 40%.

Experts think that this classification unchanged for nearly thirty years should be reconsidered.

Bengaluru, among others, is still registered as non-metro, which means less tax benefits because of higher rents. Correcting HRA exemptions could help reduce liabilities for taxpayers from rapidly developing non-metros.

Also Read: Small Business, Big Impact: How The Budget 2024 Shapes MSME Destiny

Wrapping It Up

The yearly budget release is more than a financial exercise; it is an important policy tool that determines a country’s economic and social fabric. As the Finance Minister prepares to present the budget on July 23rd, 2024, stakeholders from all sectors eagerly await the policies and allocations that will define the route forward. This year’s budget is especially significant because it arrives at a critical point in the post-pandemic recovery, when economic stability and long-term growth are essential.

Strong expectations are there, varying from infrastructure investments to health care changes and educational enhancements. The budget’s influence will spread throughout sectors affecting investment choices, job creation, and socioeconomic development schemes. It is an opportunity window where a deliberate fiscal policy will lead to fair growth, innovativeness and resilience vis-a-vis global problems.

FAQs

When will President Murmu address Parliament?

President Droupadi Murmu is set to address both Houses of Parliament on the first day of the Budget term, officially kicking off the term.

Why does FM Nirmala Sitharaman present the budget in July of this year?

In recent years, the Union Budget has been released on February 1. However, because 2024 was a general election year, FM Sitharaman delivered an interim budget in February.

What is an interim budget?

An interim budget is a temporary financial plan adopted by a government during a transition phase, usually prior to a general election. It pays for necessary government expenses until a freshly elected government can offer its own comprehensive budget.

What is the “Fiscal Deficit”?

The fiscal deficit is the difference between the government’s total expenditures and total revenue (excluding borrowings) within a fiscal year. It represents the amount of borrowing required by the government to achieve its spending needs.

How long does the Monsoon Session of Parliament last?

The Monsoon Session is set to begin on July 22nd, 2024 and will last until August 9th, 2024.

Where can I learn more about the Union Budget 2024?

The websites of the Ministry of Finance and the Parliament of India provide official information and updates. Furthermore, major news outlets will give considerable coverage and analysis of the budget once it is announced.

What is the theme for the Union Budget 2024?

In Budget 2024, the Finance Minister declared that this year’s theme will be ‘Viksit Bharat Budget 2024,’ which envisions a developed India by 2047.

Who sets the budget in Parliament?

Nirmala Sitharaman, the current Union Finance Minister, presents the Budget. On Budget Day, she delivers a ‘Budget Speech’ in the Lok Sabha, summarizing the essential aspects of the voluminous Budget document, which can run into several thousand pages.

What sectors will gain from the budget in 2024?

The upcoming union budget 2024 is likely to benefit various domestic sectors, including affordable housing, capital expenditure initiatives, consumer goods corporations, and interest-rate sensitive industries.

What is the budgetary outlook for 2024?

According to the India Budget, the budget profile for 2024 contains the government’s planned income and expenditures for the fiscal year. It provides sectoral allocations, fiscal deficit targets, tax suggestions, and economic changes to promote growth and stability.

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Shraddha Vaviya Content Writer
With several years of experience, I am deeply passionate about writing and enjoy creating content on topics such as GST, tax and various finance-related subjects. My goal is to make complex financial matters understandable for readers by simplifying them.

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