Budget 2024 Expectations

Finance Minister Nirmala Sitharaman is going to present the fourth paperless budget on February 1, outlining the interim Budget for the financial year 2024-25.

Expectations from various sectors

A. Raise Standard Deduction

Simplifying the personal tax regime by  raising the standard deduction threshold from INR 50,000 to INR 1,00,000. This adjustment aims to provide taxpayers with a higher deductible amount, thereby reducing their taxable income and potentially easing their tax burden. 

B. Increase the Threshold of Gift Limit

The current tax regime imposes a tax on gifts received from non-relatives exceeding INR 50,000 in a financial year. Expectations are on the limit to be increased to Rs 1,00,000 so that such a change could simplify gift-giving processes and reduce administrative burdens for both taxpayers and authorities.

C. Streamlining Capital Gains Taxation for Clarity and Incentives

Currently, capital gains taxation are of multiple rates and holding periods across different asset classes. The proposal suggests standardizing the holding period and potentially enhancing the limit of non-taxable long-term capital gains from equity shares and mutual funds from INR 1,00,000 to INR 2,00,000. This streamlining aims to simplify the capital gains tax regime, providing clarity to investors and potentially incentivizing long-term investment strategies.

D. Interest Deduction on Electric Vehicle Loans

To promote environmental sustainability and support the adoption of electric vehicles, the proposal recommends increasing the limit of deduction for interest paid on loans for electric vehicle purchases. Currently capped at INR 1,50,000 with a sunset clause, removing this clause and potentially raising the deduction limit could encourage more individuals to invest in eco-friendly transportation options. This aligns with the growing focus on Environmental, Social, and Governance (ESG) principles.

E. Expansion of Metro Cities for HRA Calculation

EY said to include more tier-2 cities like Hyderabad, Pune, Bengaluru, Ahmedabad, and Gurgaon in the list of metro cities for calculating House Rent Allowance (HRA) exemptions aims to address the varying cost of living across regions. This adjustment could lead to more equitable tax benefits for individuals across different urban centers.

F. Enhanced Deduction for Housing Loan Interest

EY suggests increasing the existing limit for deduction of interest on housing loans for self-occupied properties from Rs 2 lakhs to at least Rs 3 lakhs. This adjustment aims to provide further relief to homeowners, potentially reducing their tax burden and incentivizing investment in real estate.

G. Clarity on Taxation of Employer Contributions

EY proposes providing clarity on the taxation of employer contributions to specified funds exceeding Rs 7.5 lakhs, particularly in the case of Superannuation Funds/NPS (National Pension System). This clarification is essential to ensure compliance and understanding of tax liabilities for both employers and employees.

H. Reconsideration of GST on Hospital Room Rents

The healthcare industry urges a reconsideration of GST levied on hospital room rents exceeding Rs 5,000. This move aims to alleviate the financial burden on patients and reduce administrative complexities for hospitals. 

I. Promotion of Low-Cost Housing

CII suggests expanding the interest subvention scheme for low-cost housing to include total housing costs up to Rs 35 lakh instead of the current limit of Rs 25 lakh. 

J. Expectations in the power sector

The power sector expects support for green initiatives, with a focus on cleaner fuels. Anticipated measures include increased budgetary support and reforms, particularly to encourage the adoption of renewable energy sources.

K. Expectations in Auto industry 

The auto industry, especially those invested in electric vehicles (EVs), seeks continued support for greener technologies. Expectations include updates on potential schemes like FAME 3, GST reduction on lithium-ion batteries, production-linked incentives (PLIs), and lower GST on entry-level ICE two-wheelers.

L. Expectations on announcement of Metro's new corridor to connect Haryana and UP via Delhi

The auto industry, especially those invested in electric vehicles (EVs), seeks continued support for greener technologies. Expectations include updates on potential schemes like FAME 3, GST reduction on lithium-ion batteries, production-linked incentives (PLIs), and lower GST on entry-level ICE two-wheelers.

M. Expectations on green fuels, reforms, renewables

With a focus on cleaner energy sources, the Indian energy sector seeks higher budgetary support, particularly for green hydrogen and natural gas. Reforms in city gas distribution are anticipated to boost natural gas consumption, while the power sector hopes for measures incentivizing renewable energy adoption.