According to reports, in an effort to increase consumption, the Center is considering rationalizing the present income tax system, particularly for lower income levels. Furthermore, as per a credible story, tax cuts for low-income individuals may take precedence over social expenditures in Budget 2024. According to the analysis, these tax cuts are thought to be a more effective strategy to raise disposable income, which will enhance economic activity and consumption.
Concerns over the "steep rise" in the marginal Income Tax were Mentioned in the Study
The first 5% tax bracket under the new tax system begins at Rs 3 lakh; however, the tax rate rises to 30% if income surpasses Rs 15 lakh. According to the paper, this results in a six-fold rise in the tax rate while income grows by a factor of five.
The action will increase consumption, which is vital for stimulating the investment cycle and recovering demand, especially in industries that cater to consumers. The paper also mentioned that this may contribute to higher GST collections.
Also, Parliament will probably hear the budget proposal for the fiscal year 2024–25 in late July. Pre-Budget talks between business groups and Finance Minister Sitharaman are anticipated to begin around June 20. On June 18, there will be a meeting with Revenue Secretary Sanjay Malhotra.
The economic objective of the Modi 3.0 administration will be unveiled in the next Budget. Sitharaman must secure funding for the coalition government's objectives while promoting growth without raising inflation. By 2047, the agenda hopes to establish India as a "Developed India," with an economy valued at USD 5 trillion.
This fiscal year, the Reserve Bank of India has predicted that the Indian economy would grow by 7.2 percent, led by rising rural demand and declining inflation. The economy is robust and fiscal restraint is well-established, helped by the RBI's record-breaking dividend of Rs 2.11 lakh crore for FY24, which the Modi 3.0 administration takes over.
Addressing the issues facing agriculture, creating jobs, maintaining capital spending, and boosting income growth to achieve fiscal consolidation are among Prime Minister Modi's top goals during his third term. S&P, a rating agency, improved India's sovereign rating outlook to positive, indicating that the country's economic policies during the last ten years have been accepted. If the government achieves its goals for the budget deficit, there is a chance for another rating increase in the upcoming one to two years. Apart from the sale of Air India, there has been little headway in strategic disinvestment, making non-tax money difficult to come by despite robust tax receipts.
