India’s Finance Minister, Nirmala Sitharaman, will be presenting the interim budget on 1st February, 2024, right before the upcoming Lok Sabha elections. The Budget is said to boost socio-economic and infrastructure segments that would help India become a developed nation by 2047.
Experts foresee some relief under the new income tax regime as well as thrusts in infrastructure development, such as Railways. Unlike the previous ones, this highly-anticipated interim budget may not have any special announcements, but the expectations are rife as it is the final Vote of Account of the current government. Andromeda Loans has covered a broad range of sectors that can expect change in their respective landscapes post the FM’s announcements.
Some important expectations for the interim Budget 2024-2025
Here are some of the primary expectations of the forthcoming Budget:
Expansion of HRA in cities like Bengaluru and Hyderabad
At present, rented houses in Mumbai, Delhi, Chennai and Kolkata are eligible for a 50% exemption from the House Rent Allowance (HRA) while the rest fall under the 40% bracket. But with significant demographic and economic growth, the cost of living in both metro and non-metro cities has increased over the years. An increase in the HRA limit could benefit people living in most of the high-cost cities, including Bengaluru and Hyderabad.
Support for homebuyers
The Budget could see an increase in deduction limits for interest on home loans as well as new or enhanced subsidies to make homeownership easy and affordable for everyone. Further, developers and homebuyers are hopeful for a reduction in the GST on construction materials, which could reduce the cost of homes notably.
Anticipation in the real estate sector
According to builders, the real estate industry should earn an industry status in the upcoming Budget, which would result in easy loans and credit access from lenders across the country. On the other hand, Indian developers are expecting a reduction in the project finance interest rates from the interim Budget for 2024.
With the introduction of Ayushman Bharat under the Pradhan Mantri Jan Arogya Yojana (PMJAY), health insurance coverage is likely to be doubled from INR 5 lakh to INR 10 lakh. This could result in more than 50% of low income earners qualifying for the scheme in India.
Respite for salaried taxpayers
As per experts, taxpayers are likely to get some relief in terms of income tax. It is said that the interim budget might see an increase in standard deductions, after the last revision in 2019. To ensure unbiased benefits for all salaried employees, an amendment as a percent of an individual’s salary income might be proposed. And like every year, a reduction in tax slabs and an increase in tax exemption limits are awaited.
For instance, with the rise in medical costs, the medical insurance premium limit under section 80D is expected to increase from INR 25,000 to INR 50,000 for individuals and from INR 50,000 to INR 75,000 for senior citizens.
Waiver on TCS
Based on predictions by analysts, the Indian government may announce an exemption on tax collected at source (TCS) on individual credit and debit card expenditures done abroad. This can be capped at INR 7 lakh per financial year.
Removal or reduction in STT
According to experts, the Security Transaction Tax (STT) levied primarily in the cash market is anticipated to be withdrawn or minimized.
Regulations in the crypto-market
Even though the Central Bank Digital Currency (CBDC) has been piloted and thereby welcomed by the general public, an extensive policy is required to regulate cryptocurrency. With the G20 success and in-depth discussion on the crypto market, a comprehensive regulatory framework is expected to be highlighted in the February Budget.
Expectations in the other industries
The sector most expected to benefit from the interim budget is the Railways. With plans to launch 400+ new-generation Vande Bharat trains as outlined in the 2022 Union Budget, a substantial budget allocation of around INR 3 lakh crore for this department is on the cards.
With the scale, risk factor, success rate and other economic factors, the ever-advancing pharmaceutical sector is hoping for a substantial sum. Even the oil and gas industry is expecting a large portion of the budget in order to boost sustainable life.
The agricultural sector is also expecting a considerable budget allocation to overcome the damage caused by El Nino’s impact on weather and green fields.
The 2024 interim Budget may have a balanced stance towards socio-economic and infrastructure development with the next election around the corner. As a result, the focus would be more on railways, agriculture along with some relief for individual taxpayers. Regardless, the expectations will lay the foundation for a strong financial year ahead.