Budget 2024: Potential Tax Relief for the Middle ClassBudget 2024: Potential Tax Relief for the Middle Class Introduction Finance Minister Nirmala Sitharaman is poised to present her sixth budget on Tuesday. The government is expected to balance fiscal deficit reduction with tax cuts and increased social welfare spending. Taxpayers eagerly await potential relief measures. Taxpayer Expectations from Budget 2024-2025 * Revision of Income Tax Slabs and Rates: Changes to income tax rates and brackets to alleviate the burden on the middle class. * Increased Consumer Spending: Measures to enhance disposable income and stimulate consumer spending. * Capital Gains Tax Rationalization: Streamlining the capital gains tax structure for various assets. * Simplified Compliance: Reducing the complexity of tax filing and making compliance easier. * Corporate Tax Reduction: Lowering corporate tax rates, particularly for SMEs. * Investment and Business Stimulation: Incentives to attract investments and boost economic activity. Economic Survey Insights on Direct Taxes The Economic Survey 2023-2024 projects a 13.4% increase in gross tax revenues (GTR) in FY24, fueled by a 15.8% growth in direct taxes. The government’s focus on improving tax progressivity has contributed to the increased share of direct taxes in GTR. Tax collection efficiency has also improved, leading to lower costs. Conclusion Taxpayers eagerly await the Union Budget presentation for potential relief measures. The government’s dual focus on fiscal deficit reduction and tax relief could provide much-needed support to the middle class, boost consumer spending, and stimulate economic growth. The Economic Survey highlights positive trends in tax revenues and efficiency, setting a favorable stage for budget announcements.
Budget 2024: Will the middle class get a tax cut?
Finance Minister Nirmala Sitharaman will deliver his sixth consecutive budget presentation on Tuesday. To appease his supporters, Prime Minister Narendra Modi’s government is expected to continue focusing on reducing the fiscal deficit, while at the same time Cut taxes and increase social welfare spending. The respite that Nirmala Sitharaman will provide in the Union Budget is eagerly awaited by taxpayers. When she makes her first budget presentation under Modi 3.0 in the Lok Sabha at 11 am on Tuesday, the information will be made public.
What do taxpayers hope to achieve with the 2024-2025 budget?
1. Changing income tax rates and brackets to help the middle class.
2. An increase in consumer spending and disposable income.
3. Rationalizing and streamlining the capital gains tax structure for different types of assets.
4. Simplify and improve compliance.
5. Reduction of corporate tax, especially for small and medium-sized enterprises.
6. Stimulation of investments and business activities.
What did the Economic Survey say about direct taxes?
The Economic Survey 2023-2024, which was released on Monday, forecast gross tax revenues (GTR) to rise 13.4% in FY24, representing tax revenue growth of 1.4. In comparison to FY23, this gain was fueled by a 15.8% increase in direct taxes and a 10.6% increase in indirect taxes. About 55% of the GTR came from direct taxes, with the remaining 45% coming of indirect taxes. The letter from the Ministry of Finance also noted that the government’s efforts to improve the progressivity of the tax are in line with this higher contribution of direct taxes.
Moreover, the efficiency of tax collection has increased over time as evidenced by the decline in the cost of collecting direct taxes from 0.66 per cent of total collections in FY20 to 0.51 per cent in FY23. Due to robust economic growth and improved compliance, both Direct and indirect tax revenues rose significantly, exceeding cautious budget expectations.
