Finance Minister Nirmala Sitharaman will present the full budget for 2024 on July 23.

With several sectors expecting major announcements, salaried taxpayers in particular are hoping for significant income tax relief, including changes to the new income tax system and standard deductions.

Experts predict that the Union Budget for 2024 will emphasise capital spending, especially on infrastructure, to boost GDP growth.

Despite positive budget expectations, there may be no significant tax cuts for the middle class.

“The government will present the full budget for FY 2024-25 on July 23 and there are already positive expectations about the measures announced on that day. If we look at the track record of this government, it has always been business as usual and the major policy announcements have typically been made outside the budget,” said Himanshu Kohli, co-founder, Client Associates.

The government, led by Prime Minister Narendra Modi, is expected to lean more towards populism given its weaker mandate and the substantial dividend of Rs 2.1 lakh crore from the Reserve Bank of India (RBI) for FY24.

The dividend is likely to help maintain fiscal consolidation, even as fiscal discipline is expected to take priority, with the aim of reducing the budget deficit from 5.1% to 5%.

While there are high expectations for tax cuts, Kohli suggests that the government will focus on prudent financial management and economic growth.

“While there is a general expectation that the budget will focus more on populist measures, we believe the government will still prioritize prudent fiscal management and economic growth,” he said.

Sandeep Agrawal, Director and Co-Founder of Teamlease Regtech, shares this sentiment, noting that major changes to the tax structure may not be on the cards given the substantial reforms included in the 2023 Budget.

However, he expects announcements that will improve the Ease of Doing Business (EoDB) and consolidate the tax system. He also hopes for progress towards the Direct Tax Code, which could reduce the tax burden and simplify the tax structure.

Agrawal suggests that the government could raise the limits for each tax bracket in the new system, which could reduce the tax burden on the middle class.

By increasing the discount limit, more taxpayers could switch to the new system. This could increase disposable income and purchasing power.

Despite these expectations, tax cuts for the middle class may not be the central focus of Budget 2024.