Budget 2024: Government Should Consider Tax Relief for Salaried Individuals; Know Here Why?

Finance Minister Nirmala Sitharaman prepares to present the full budget for the ongoing financial year later in July. There’s a growing call for government to provide tax relief to salaried taxpayers. Despite India’s fast economic expansion, per capita income growth in the broad middle-income group has slowed, which is primarily made up of salaried individuals. This gap has slowed private consumption which is the key driver of economic growth. Experts believe that offering tax relief to salaried taxpayers could boost spending. In turn, this could stimulate the economy.

Union Budget Tax Expectations

It is expected that in the upcoming budget of 2024, there will be an increase in the standard deduction which was reintroduced in Budget 2018 at Rs.40,000 per year. It replaced two earlier deductions, one is a travel allowance ( Rs.19,200) and the second is a medical deduction (Rs.15,000). There has been a constant demand to raise this limit even though in the interim budget of 2019, it was increased to Rs.50,000.

Some experts highlight the fact that the standard deduction has not been revised in almost five years. They state that an increase in this limit would help many taxpayers who are facing problems with inflation and low salary increases.

Potential Tax Changes in Budget 2024

According to sources, the finance ministry of the government is considering several tax relief measures. A final decision is expected shortly before the budget presentation. Here are some potential changes:

1. Increased Standard Deduction: There is a strong possibility that the standard deduction limit will be raised. This would provide immediate relief to salaried individuals. It would reduce their taxable income.

2. Higher Exemption Limit: Another proposal under review is raising the exemption limit under the new tax regime from Rs.3 lakh to Rs.5 lakh per year. This would mean income up to Rs.5 lakh would not be taxed. It offers significant relief to many taxpayers.

3. Tax-Free Income Up to Rs.8 Lakh: There is also consideration to eliminate tax liability on income up to Rs.8 lakh annually. This aligns the tax structure with the criteria for the Economically Weaker Section (EWS). It would provide a major boost to lower and middle-income groups.

The tax relief will not only reduce the tax burden of salaried people but also increase their spending power resulting in economic growth. Increased disposable income will help individuals spend more on goods and services, leading to increased demand and availability of jobs in the economy.

Moreover, tax relief can help mitigate the impact of inflation and the rising cost of living. These have been significant concerns for the salaried class. Tax relief can encourage savings and also investments. This contributes to financial security and overall economic stability.

Let us see if the government will take into consideration the needs of salaried individuals in the Budget 2024 by introducing new measures that will give meaningful tax relief or not. The announcement of the budget will be closely watched by everyone.