Budget 2024: Government will give a gift by increasing the benefits of NPS in the interim budget, women are expected to get tax exemption.
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budget 2024: Before the interim budget to be presented before the general elections, the government will avoid populist announcements and will continue to focus on fiscal consolidation. Economists have expressed this opinion. However, economists say that amid the demand to implement the old pension scheme, NPS (New Pension SchemeAlong with making ) attractive, there is hope of getting some separate tax exemption for women. Besides, there is also a possibility of giving some relief to the employed and middle class by increasing the amount of standard deduction in the election year. Finance Minister Nirmala Sitharaman will present the interim budget for 2024-25 in Parliament on February 1. This is his sixth budget. N R Bhanumurthy, a well-known economist and currently the Vice-Chancellor of the Dr BR Ambedkar School of Economics University, Bengaluru, said that given the government’s past stance, the upcoming interim budget is unlikely to be populist. The reason for this is that the Prime Minister has already announced some measures like Garib Kalyan Anna Yojana, which are likely to continue in the coming year also.
NR Bhanumurthy said that, however, there are expectations that in view of the old pension scheme becoming a political issue in many states, the government may possibly make some announcement in the budget to make the pension system (NPS) attractive. It is noteworthy that the old pension system has been implemented in some states including Punjab and Rajasthan. In view of this, other states and central employees are also demanding implementation of old pension. In view of this, the government had formed a committee in April last year under the chairmanship of Finance Secretary TV Somanathan to review and improve the National Pension System (NPS). The committee will probably submit its report at the end of this month.
When asked about tax relief to the employed and middle class before the elections, NR Bhanumurthy said that this will be an interim budget. In such a situation, one should not expect much change in the tax system because its purpose is only to get approval for the expenditure budget till the budget of the entire year is presented. Anyway, frequent changes in tax system and structure can have an adverse impact on compliance. Therefore, I do not expect any changes in the income tax system. Sudipto Mandal, chairman of the Center for Development of Studies, also said that past experience shows that this government has followed fiscal policies. For example, even in the election year 2019, not much populist schemes and expenditure were resorted to. Therefore, I do not expect too many populist schemes in the upcoming budget. However, old schemes like Kisan Samman Nidhi can be retained.
Regarding relief on the tax front, he said that the employed and middle class can get some relief on the income tax front. Some relief is expected to be provided by increasing the amount of standard deduction. At present there is an exemption of Rs 50,000 under standard deduction. Professor Lekha Chakraborty at the National Institute of Public Finance and Policy, an economic research institute, said that the budget will not be populist. The Finance Minister will not deviate from the path of fiscal consolidation. However, targeted cash transfers to farmers will remain in place given rising food inflation and disruption in supply chains. When asked about the tax relief, Lekha Chakraborty, who is also a member of the Governing Board of the Munich-based International Institute of Public Finance (IIPF), said that in view of the emphasis on women voters, women are entitled to tax relief under Section 88C of the Income Tax Act. You may get some separate tax exemption for this. However, since the number of income tax payers is very small compared to the Indian population, announcements related to tax relief for women and men do not have much impact.
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