Union Budget: How interim Budget measures impacts the economy

While the 2024 interim budget might not be a game-changer, it provides valuable insights into the country's financial health and future priorities. For businesses and individuals, understanding the budget's focus and direction can help in strategic planning and decision-making.Remember, the interim budget is not the final act. The full-fledged budget for FY 2024-25 will be presented after the elections, reflecting the new government's vision and plans.Income Tax

• 80D deduction limit

The deduction limit under Section 80D for medical insurance premiums should be increased from Rs25,000 to Rs50,000 for individuals and ₹50,000 to ₹75,000 for senior citizens, reflecting rising healthcare costs.Increase the Standard deduction threshold from Rs50,000 to Rs1,00,000. The inflation index has gone up from 4% in September 2019 to 5.55 per cent in November 2023

• Bengaluru to be considered a metro city for the purpose of HRA exemption

Despite being recognised as a metro city by the Indian Constitution, Bengaluru remains classified as a non-metro for income tax purposes, limiting HRA deductions to 40 per cent for its residents instead of 50 per cent available in other metro cities.

• Corporate tax

Lowered corporate tax rates for new manufacturing ventures, incentives for exports via tax holidays, and support for research and development with weighted deductions.GST

• Paying GST on reverse charge for non-complaint vendors:

Buyers who are large taxpayers with turnovers exceeding Rs100 crore or Rs500 crore could directly pay GST dues to the government instead of their small vendors. This shift in tax payment onus aims to alleviate the compliance burden on small businesses and facilitate smoother transactions for large enterprises dealing with smaller vendors.Indian RailwaysTotal 75 Vande Bharat trains to be rolled out by August 2023 and now planned for more on more routes across India.CAPEX momentumIncrease the outlay for capital expenditure by around 10 per cent to Rs11 lakh crore.GDP growth GDP growth country's real GDP growth projection for FY24 to 7 per cent from 6.5 per cent earlierWelfare schemesWomen welfare schemes like Ladli Behna in Madhya Pradesh are considered to be one of the major reasons behind big wins of the BJP in recent state elections and, therefore, it is quite likely that the government might announce more women welfare-related central schemes in the 2024 Budget.Tax savingThe Budget must also create a level playing field among various savings products from tax, disclosure and investor protection point of viewDisinvestmentThis will signal government's privatisation goals amid latest setback on the strategic sale front; it also adds to the government's revenue mop up.RBI dividendNo special mention of RBI dividend in Budget but it’s a part of “dividends and profits”. Generous RBI dividends have helped the government narrow its fiscal gap.Digital eraBudget might endorse the implementation of the ‘Open Network for Digital Commerce’ (ONDC) initiative. This initiative can empower MSMEs to access various e-commerce platforms without encountering entry barriers, benefiting from standardized data and processes.Auto sectorCurrently pre-owned luxury cars attract a staggering 110% GST & 100% excise duty on imported CBU units, which is a major deterrent to imports. Reducing these taxes would make imported cars more affordable and accessible to consumers and help boost domestic market competition.Reduction in GST on lithium-ion battery packs and cells from 18 per cent to 5 per cent.Insurance sectorWe anticipate that the finance minister will exempt insurance policies from GST, which will bring down insurance premiums. This step will increase insurance affordability and help fulfil Prime Minister Modi’s dream of insurance for all Indians by 2047.DefenceDue to rise of geopolitical tensions around the globe, the focus will strongly remain on defence with possible increased spends – the total allocation is expected to reach ₹6,35,085 crore (7 per cent increase).The author is currently working with Areness as Director - Finance. He is having 12 years of enrich experience in the field. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.