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Thursday, 01 Feb 2024

What the budget has for salaried individuals and retirees

Hello and welcome to our Budget summary for salaried individuals and retirees. Nirmala Sitharaman’s interim budget has a host of interesting takeaways for salaried individuals and retirees.

- Economic Resilience and Growth:

The Indian economy has seen profound transformation over the past decade, creating a robust backdrop for career stability and growth opportunities in various sectors.

- Inclusive Development and Direct Impacts: Focus on nationwide infrastructural improvements including 'housing for all', 'har ghar jal', could mean enhanced quality of life and potential real estate investment opportunities.

- Food Security and Agro-economic Stability:

Government’s efforts in ensuring food security through free ration for 80 crore people is likely to maintain food price stability, indirectly benefiting household budgets.

- Taxation and Financial Planning

- Direct Taxation Changes: The tax liability threshold has been raised to ₹ 7 lakh under the new tax regime, potentially reducing the tax burden and increasing your take-home salary.

- Improved Taxpayer Services: The Government's efforts to streamline tax processes and resolve long-standing disputes should lead to a more efficient tax environment, allowing for better financial planning.

- Healthcare and Social Welfare

- Expansion of Ayushman Bharat Scheme:Broader healthcare coverage may reduce your healthcare expenses and provide a safety net for your family.

Housing Initiatives:

The Pradhan Mantri Awas Yojana (Grameen) is close to achieving its target of constructing 3 crore houses.

- An additional 2 crore houses are targeted to be built in the next 5 years.

- A new scheme called Housing for Middle Class will be launched to promote homeownership among the middle class.

- Focus on Social Inclusivity: Policies aimed at all-round development could lead to a more equitable society, fostering a better living environment.

- Robust Financial Sector Growth: Strengthening of the financial sector is expected to make savings and investment options more efficient, offering you a diversified investment landscape.

- Infrastructure Development: The government's increased focus on infrastructure, with substantial capital expenditure, could open new avenues in real estate investments and job opportunities in related sectors.

- Technological Advancements and Opportunities: The push towards technological innovation may offer new investment channels in emerging tech sectors and start-ups.

Pension Payments and Expenditure:

- Pension payments are a significant part of the Government of India's Demands for Grants, covering various ministries and departments.

- The Central Government's expenditure on pensions is projected to be around `2.40 lakh crore in BE 2024-25, accounting for 0.7% of the estimated GDP.

- The four Government of India Demands for Grants that cover pension expenses are Defence (Pensions), Civil (Pensions), Telecommunications, and Department of Health & Family Welfare.

Tax Updates for Individual Tax Payers

For individuals other than those falling under specific categories:

- Total income up to Rs. 2,50,000: Nil tax

- Total income between Rs. 2,50,000 and Rs. 5,00,000: 5% of the amount exceeding Rs. 2,50,000

- Total income between Rs. 5,00,000 and Rs. 10,00,000: Rs. 12,500 plus 20% of the amount exceeding Rs. 5,00,000

- Total income exceeding Rs. 10,00,000: Rs. 1,12,500 plus 30% of the amount exceeding Rs. 10,00,000

For individuals aged 60 years or more but less than 80 years:

- Total income up to Rs. 3,00,000: Nil tax

- Total income between Rs. 3,00,000 and Rs. 5,00,000: 5% of the amount exceeding Rs. 3,00,000

- Total income exceeding Rs. 5,00,000: Rs. 10,000 plus 20% of the amount exceeding Rs. 5,00,000

For individuals aged 80 years or more:

- Total income up to Rs. 5,00,000: Nil tax

- Total income between Rs. 5,00,000 and Rs. 10,00,000: 20% of the amount exceeding Rs. 5,00,000

- Total income exceeding Rs. 10,00,000: Rs. 1,00,000 plus 30% of the amount exceeding Rs. 10,00,000

Surcharge on Income Tax:

- Surcharge is applicable on the income tax amount calculated as per the above rates.

- The surcharge rates vary based on the individual's residency status and income level.

- The surcharge ranges from 10% to 37% for non-residents and individuals with different income brackets.

Other Important Updates:

- e-Verification scheme: The authorities have introduced an e-Verification scheme to collect accurate income information and reduce tax evasion. This scheme aims to ensure comprehensive determination of income.

- PAN as Business Identification Number (BIN): PAN is now being leveraged as the BIN for registration purposes in various government departments and services. This integration aims to streamline processes and enhance efficiency.

- Integration of PAN with Aadhaar: PAN and Aadhaar integration has been carried out to facilitate de-duplication and ensure accurate identification. As of December 31, 2023, a total of 58.76 crore PANs are linked with Aadhaar.

- Integrated e-Filing and Centralised Processing Center 2.0 (CPC 2.0) project: The CPC 2.0 project aims to provide a better e-filing experience, ease of compliance, and faster processing of Income Tax Returns (ITRs). As of December 31, 2023, 8.18 crore ITRs have been filed for AY 2023-24, marking a 9% increase compared to the previous year.

- Tax Information Network 2.0: The introduction of TIN 2.0 has enabled real-time credit of taxes and faster refunds to taxpayers' bank accounts. Till November 27, 2023, 6 crore challans involving an amount of Rs. 12.54 lakh crores have been processed.

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