The ucoming Interim Budget is likely to have small tax relief measures and an increase in welfare spending.
The 2024-25 Interim Budget, set to be announced on 1 February, is expected to modify certain income tax rates, particularly benefiting lower-income taxpayers.
Additionally, there may be an increase in the standard deduction and a higher exemption limit, encouraging taxpayers to adopt the new income tax regime, Indian Express reported citing officials.
The tax department is reportedly considering enhancing revenue collection efficiency through additional transactions under the ambit of Tax Deducted at Source (TDS) and implementing comprehensive profiling of taxpayers.
These strategies have shown positive results in their initial stages over recent years.
In the past too, interim budgets, also known as vote-on-account, have not included significant changes.
For instance, in the 2019 interim budget, then Finance Minister Piyush Goyal proposed increased standard deduction and TDS threshold, along with benefits for farmers and unorganised sector workers.
In 2014, Finance Minister P Chidambaram announced excise duty reductions for small cars, motorcycles, scooters and SUVs besides large and mid-segment cars, and tax relief for mobile handsets.
Similarly, in 2009-10, Finance Minister Pranab Mukherjee introduced fiscal target relaxations.
In the final year of the Former PM Atal Bihar Vajpayee-led NDA government, the 2004-05 Interim Budget by Jaswant Singh included changes in stamp duty, industry revival packages, and merging of dearness allowance with basic pay, along with significant tax reforms announced earlier in January 2004.
The upcoming budget is expected to focus on infrastructure and welfare spending without significant fiscal impact.
The government is likely to continue its emphasis on capital expenditure, though at a reduced pace compared to previous years.
The budget estimate for capital expenditure was increased to Rs 10 lakh crore for 2023-24.
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is expected to receive a higher budget allocation after an initial reduction in the FY24 budget estimate.
The government has stated that additional funds will be provided as needed, as evidenced by the extra allocation of Rs 16,143 crore in December 2023.
The Budget session of Parliament, the last of the 17th Lok Sabha, is scheduled from 31 January to 9 February, with the Interim Budget to be presented by Finance Minister Nirmala Sitharaman on 1 February.
The Lok Sabha elections are expected around April-May, after which the newly elected government is expected to present a full budget in July.
Traditionally, a vote-on-account is presented to approve expenditure for the initial months of the financial year without altering the tax structure.
However, some governments have introduced policy measures or adjusted tax rates in Interim Budgets before elections.
Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.
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