Every year brings anticipation of the new Budget, and on 1st February, our Finance Minister Nirmala Sitharaman presented the annual Budget in Parliament.
The common person is eager to watch the Budget and see what changes it brings in their daily, monthly, and annual expenses and the exemptions they will receive.
Nirmala Sitharaman, the finance minister, said that she is a member of the middle class and can relate to the stress that middle-class families experience when speaking about middle-class taxpayers. However, she claimed that the middle class was not subject to any new taxes under the Modi administration.
What Were The Middle-Class’ Expectations from The 2023-24 Budget?
The Middle class has major expectations with the Budget 2023-24 with expectations of more job creation, lowering of GST in the insurance sector, deductions in 80D, which is health insurance, and changes in the income tax slab.
These were the major areas of concern for the middle class and salaried person.
5 Big Announcements for The Middle Class In the Budget 2023-24
This year’s Budget has 5 major announcements for the middle class, which are discussed in detail.
1. New Tax Slabs Have Been Introduced
Sitaraman recommended a change to the tax code that would greatly benefit people in the middle class by decreasing the number of tax slabs to five and raising the threshold for tax exemption to Rs. 3 lakhs.
2. Rebate Limit Has Been Increased to 7 Lakhs
In the new tax system, the minister suggested raising the rebate cap to Rs. 7 lakhs, which would exempt individuals with incomes up to that amount from paying any taxes. In the old and new tax systems, people with income of up to Rs. 5 lakhs are currently exempt from paying any income tax.
3. Salaried Class Is Exempted
As the Finance Minister recommended extending the benefit of the standard deduction to the new tax system, the third proposal of the Budget significantly relieves the burden on the salaried class and pensioners, including family pensioners. Thus, each salaried individual earning Rs. 15.5 lakhs or greater will earn Rs. 52,500. Standard deductions of Rs. 50,000 for salaried individuals and up to Rs. 15,000 from family pensions are currently only permitted under the previous system.
4. Increase In The Tax Exemption for Leave Encashment
For the salaried government class, the Budget proposed raising the cap on the amount of leave that can be redeemed tax-free to Rs. 25 lakhs when an employee retires from non-government employment. The most that can currently be excluded is Rs. 3 lakhs. In addition, the new income-tax regime was proposed as the default tax system in the Budget. However, the previous tax structure will still be available to citizens.
5. The Reduced Surcharge Rate
Finance minister suggested that the highest surcharge rate under the new tax system for income over Rs. 2 crores be lowered from 37% to 25% as part of her 4th announcement regarding personal income tax. The maximum tax rate, which is currently 42.74 per cent and one of the highest in the world, would drop to 39 per cent as a result. However, for those in this income group who choose to remain under the old system, no modification in surcharge is proposed.
These major announcements were made in the Budget 2023-24 by Finance Minister Nirmala Sitharaman, and it is yet to say how the middle and salaried classes will react to it and the impact it will have on their respective lives.
Apart from this many are claiming this to be a vision-less budget, some down sides from Budget 2023 are reduced packages for agriculture sector, education sector and healthcare sectors. These 3 primary sectors faced reduction which is concerning looking at the future.