Union Budget 2024: An insight into announcements made in Union Budget 2023 by Nirmala Sitharaman

28 Dec 2023 , 03:14 AM

On February 1, 2024, Union Finance Minister Nirmala Sitharaman will deliver the interim Budget for FY2024-25. The whole budget will be released once the next government takes charge, as Lok Sabha elections are scheduled for early next year. The details of this budget will be considered valid only until the results of the Lok Sabha elections in 2024 are declared and a new government takes office.

Earlier this month, FM Sitharaman stated at the CII Global Economic Policy Forum 2023 Summit that the Union Budget 2024, which is due to be delivered on February 1st, is unlikely to make any ‘spectacular announcements.’

FM Sitharaman delivered a pragmatic, populist-in-parts, and growth-oriented Budget on February 1, 2023. Sitharaman stated at the presentation of the Union Budget for Fiscal Year 2023-24 that the suggestions addressing personal income tax will largely help the country’s ‘hardworking middle class.’

Here are some of the prominent tax announcements made by FM Sitharaman in Budget 2023:

1. Budget 2023: Announcement of new tax slabs: The new personal income tax structure reduced the number of income slabs from six to five. The tax-free threshold has been raised to Rs 3 lakh. The new relevant tax rates are zero for individuals earning up to Rs 3 lakh, 5% for those earning Rs 3-6 lakh, 10% for those earning Rs 6-9 lakh, 15% for those earning Rs 9-12 lakh, 20% for those earning Rs 12-15 lakh, and 30% for those earning Rs 15 lakh or more.
2. Budget 2023: New tax regime will be the default tax regime: According to Finance Minister Sitharaman, the new tax regime is the default tax regime. She also stated that the administration will take more steps to make the voluntary tax regime more appealing. The new tax structure went into effect in 2020, with six income tax bands beginning at Rs 2.5 lakh.
3. Budget 2023: Revised Standard Deduction: Budget 2023 introduced a standard deduction of Rs 50,000 under the New Tax Regime, which would be effective in fiscal year 2023-24. Budget 2023 also included a deduction on family pension income under Section 57(iia). Section 80CCH(2) included a deduction for amounts paid or deposited in the Agniveer Corpus Fund.
4. Budget 2023: Maximum tax including surcharge will be 39%: FM Sitharaman stated that the highest surcharge rate, which was 37% at the moment, will be reduced to 25%. She stated that the proposed modification would reduce the maximum tax rate to 39%.
5. Budget 2023: Leave Encashment: During the Budget 2023, the government suggested raising the Rs 3 lakh ceiling for tax exemption on leave encashment on the retirement of non-government salaried employees to Rs 25 lakh. The Rs 3 lakh cap was last set in 2002, under the Atal Bihari Vajapayee administration, when the highest basic pay in the government was Rs 30,000 per month.

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