Budget 2024 Expectations: Income Tax Relief, Infrastructure & Capex Spending, NPS under highlight

31 Jan 2024 , 05:42 PM

On February 1, 2024, Finance Minister Nirmala Sitharaman will deliver the last Budget of the Narendra Modi government. Because this Budget is being delivered during the Lok Sabha election year, it will be considered an interim budget or a vote on account.

Experts believe that the Modi administration would continue to prioritise infrastructure development this year, with a particular emphasis on roads and railroads. In addition, various tax breaks are expected to help implement the new personal income tax regime.

Here are some of the most eyed expectations from the upcoming budget:

1. Import Duty relief for auto sector: Prashanth Doreswamy, President and CEO of Continental India, stated, ‘The sector is eagerly anticipating a declaration on import duty reduction, which would have a favourable influence on raw material costs, hence helping to stabilise commodity prices.
2. Consumer Electronics, Durables’ industry expectations: Union Budget 2024 is critical to maintaining India’s position as the world’s third biggest economy. For the market to thrive, PLI schemes should be expanded to include smart TVs, refrigerators, and washing machines. Income tax slabs may be reevaluated to increase disposable income.
3. Interest Deduction on Electric Vehicle Loans: The current limit of deduction for interest paid on loan for purchase of electric vehicles is Rs 1,50,000. Increasing such limit of interest deduction and removing the sunset clause on the issuance period of loan (which is currently pegged until 31 March 2023) may be considered given the thrust on the Environmental, Social, and Governance (ESG) agenda.
4. Cybersecurity Spending: The Ministry of Electronics and Information Technology (MeitY) has budgeted Rs 625 crore to develop the country’s cybersecurity infrastructure in the Union Budget 2023. Analysts question if the government would make a comparable commitment this year as well.
5. FAME II extension in EV Industry: Uday Narang, the Chairman of Omega Seiki Mobility, emphasizes that the affordability of electric vehicles (EVs) depends on sustained government support. This involves a reduction in GST on lithium-ion batteries, the implementation of FAME 3 with clear details on subsidies for electric trucks, and initiatives for domestic battery manufacturing and skill development.
6. NPS Changes are most likely: All eyes will be on how the Modi government addresses the sensitive topic of ensuring that government employees are not worse off under the National Pension System than they were under the previous pension plan in the Budget, which is set to be delivered on Thursday.
7. Affordable Housing sector likely to benefit: We anticipate a possible good shift in the budget, particularly in the affordable housing sector, during this election year. The government has a chance to evaluate and revise the present affordable housing restriction of 45 lakhs.
8. Railway Budget to be primarily focused on new trains, safety: The Railway Budget 2024 is projected to focus on ongoing record capital investment for the national carrier. The focus will most likely be on the introduction of new trains like Vande Bharat Express, Vande Bharat sleeper trains, and Amrit Bharat Express trains, as well as more LHB coaches to replace ICF coaches for safer, more pleasant, and quicker travel.
9. Top Expectations for Taxpayers: To promote widespread use of this regime, a few adjustments to the CTR may be proposed. Of course, the government will have to do the calculations between retaining the substance of the CTR and greater broad use.
10. Focus on Suryodaya Yojana: A further push for rooftop solar electricity (under the Suryodaya Yojana) is envisaged. The scheme’s declared goal is to cut poor people’s electricity bills while also making India self-sufficient in the energy sector.

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