Budget 2024: Nirmala Sitharaman's speech may have something for India's salaried. Read on

As India's middle class eagerly awaits the Union Budget 2024, Moody's Analytics offers a glimpse of optimism, suggesting there could be something significant for them. With the full budget set to be presented in Parliament on Tuesday, the focus is on potential increases in capital expenditure and a more standardized approach to taxation.

Aditi Raman, Associate Economist at Moody’s Analytics, in a note said after losing its absolute majority in the Lok Sabha, Prime Minister Narendra Modi's BJP aims to build confidence and public trust in the new coalition government. In the India budget preview, Moody's Analytics said the budget will have a bearing on business and consumer confidence.

India's updated union budget will maintain, or quite possibly increase, capital expenditure on infrastructure and funding for production-linked incentive schemes. The budget will also likely usher in a more standardised approach to taxation, but the broad thrust will be one of policy continuity in the wake of the surprising outcome in this year's general election, it added.

Middle-class wish-list for July 23:

The middle class hopes for lower tax rates and an increase in the basic exemption limit. Currently, the basic exemption limits are Rs 2.5 lakh under the old tax regime and Rs 3 lakh under the new regime. There is anticipation that the limit under the new regime could be raised to Rs 5 lakh. According to Mayank Mohanka, founder-director of TaxAaraam India, such a move would not significantly impact tax revenue but could provide substantial savings for those in higher tax brackets.

Apart from a hike in standard deduction, many taxpayers and financial experts are advocating for the introduction of an additional tax slab for incomes between Rs 15-20 lakh. Currently, incomes up to Rs 15 lakh are taxed at 20 percent, and those above Rs 15 lakh at 30 percent. A new 25 percent tax bracket could offer a more balanced approach.

Extending House Rent Allowance (HRA) and home loan interest tax benefits to the new tax regime is a key demand. These benefits are significant incentives under the old regime, and their inclusion in the new regime could encourage more taxpayers to switch.

Since 2018-19, long-term capital gains (LTCG) on equity shares or mutual fund units exceeding Rs 1 lakh are taxed at 10 percent. Financial experts suggest raising this limit to Rs 2 lakh to reflect the current economic climate.

There is also a possibility that the government may redefine Futures and Options (F&O) trading as speculative business. This change would limit the ability to offset F&O losses against other income types, a move aimed at curbing excessive retail participation in this segment.