Budget 2024: Small taxpayers may reap big benefits

New Delhi: The Modi 3.0 government has accelerated preparations for the union budget. There is consideration underway to provide relief in income tax to the middle class. The effort is to benefit those whose earnings are low as rising inflation has reduced their purchasing power. Income tax relief would prove beneficial for both the common man and the economy.

Finance Minister Nirmala Sitharaman is considering significant relief for the country’s low-income group, through tax cut. Bloomberg’s report claims that the government is considering measures exceeding ₹50,000 crore in the upcoming budget to boost spending. This includes cuts in tax rates for low-income earners.

The report states that officials from the Finance Ministry are considering tax cuts for those consumers who are likely to spend the most. This could benefit individuals earning between ₹5 lakh to ₹10 lakh annually. Currently, they face tax rates ranging from 5% to 20%. The budget may announce a reduction in this, along with the introduction of a new tax slab. Put simply, the government’s focus in the budget would be on providing tax relief to the middle class.

Financial year 2024-25 budget is believed to be pro-people. That is, the expectations of the common people will be taken into account. If the government provides relief to the middle class in this budget, it will achieve two objectives. First, increasing the income available to the middle class by raising tax rates. Second, the economy will benefit.

Reducing income tax rates will increase disposable income for ordinary taxpayers. With increased income, savings and expenditures of individuals will also rise. Increased spending will boost consumption and economic activities. Inturn, accelerating economic activities will benefit the economy.

According to the report, apart from income tax, the budget could also decide on the PM-KISAN scheme. Discussions are underway to increase the annual payment to small farmers from ₹6,000 to ₹8,000.

Along with the common man, industry organizations like CII and FICCI have also demanded cuts in personal income tax from the government and Finance Minister Nirmala Sitharaman. Discussions are currently ongoing on the budget proposal. The final decision will be announced during the budget presentation. The Union Budget for FY2024-25 is expected between the second & third week of July.