General election In the interim budget to be presented before 2019, the government will avoid populist announcements and continue to focus on fiscal consolidation. Economists have expressed this opinion. However, economists say that amid the demand to implement the old pension scheme, along with making NPS attractive, there is hope of getting some separate tax exemption for women. Apart from this, 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.
Budget will not be populist
“Given the government’s past stance, the upcoming interim budget is unlikely to be populist,” said N R Bhanumurthy, a renowned economist and currently vice-chancellor of the Dr BR Ambedkar School of Economics University, Bengaluru. This is because the Prime Minister has already announced some measures like Garib Kalyan Anna Yojana, which are likely to continue in the coming year as well.” He said, ”However, there are expectations that in many states the old Considering that the pension scheme has become a political issue, the government may possibly make some announcement in the budget to make the pension system attractive.
NPS can be made attractive
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 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, Bhanumurthy said, “This will be an interim budget. In such a situation, not much change should be expected in the tax system. Because its purpose is to get approval only for the expenditure budget until the budget for the entire year is presented. However, frequent changes in tax regime and structure can have an adverse impact on compliance. Therefore, I do not expect any changes in the income tax system.
Kisan Samman Nidhi expected to continue
Sudipto Mandal, chairman of the Center for Development of Studies, also said, “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. So I don’t 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, ”The working class and the 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.
Women can get separate tax exemption
At present there is an exemption of Rs 50,000 under standard deduction. “The budget will not be populist,” said Lekha Chakraborty, professor at the National Institute of Public Finance and Policy, an economic research institute. 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 disruptions in supply chains. When asked about the tax relief, Lekha Chakraborty, who also serves as a member of the Governing Board of the Munich-based International Institute of Public Finance (IIPF), said, “In view of the emphasis on women voters, under Section 88C of the Income Tax Act.” There may be some separate tax relief for women.” However, he said, ”Since the number of income tax payers is very less compared to the Indian population, the announcements related to tax relief for women and men do not have much impact. Does matter.”
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