The Union Budget 2024 lays the foundation for India’s economic roadmap, focusing on growth, fiscal stability, and strengthening key sectors. With a vision to boost investments, encourage domestic manufacturing, and improve infrastructure, the budget introduces several measures to streamline taxation, support businesses, and enhance public welfare.
One of the most significant aspects of this budget is the revision in tax policies, aimed at increasing disposable income and stimulating economic activity.
Changes in Income tax structure:
Here’s a clear breakdown of how ₹12 lakh can be tax-free under the new tax regime:
Tax Calculation for ₹12 Lakh Income
| Income Slab | Tax Rate | Tax Calculation |
| Up to ₹4 lakh | 0% | No tax |
| ₹4 lakh – ₹8 lakh | 5% | ₹20,000 (5% of ₹4L) |
| ₹8 lakh – ₹12 lakh | 10% | ₹40,000 (10% of ₹4L) |
| Total Tax Before Rebates | ₹60,000 |
How is the Tax Waived?
- The government provides rebates and deductions that completely offset this tax.
- For salaried individuals, the Standard Deduction of ₹75,000 increases the effective tax-free income threshold to ₹12.75 lakh.
Thus, despite a ₹12 lakh income, the applicable rebates and deductions ensure that no tax is payable under the new tax regime.
But what is the impact of this on stock markets?
The increase in tax-free income to ₹12 lakh means people will have more disposable income, leading to higher spending, which is a significant boost for the economy and stock markets.
With extra money in hand, consumers are likely to increase their spending on essentials and discretionary goods, directly benefiting the FMCG sector as demand for daily-use products rises.
Additionally, the surplus income may lead to higher retail investments in the stock market, positively impacting sectors like banking, real estate, and automobiles.
Increased consumption drives corporate earnings, strengthening stock prices and market sentiment.
This, in turn, creates a multiplier effect on the economy, enhancing GDP growth and attracting foreign investments. Overall, tax relief acts as a catalyst for economic expansion, driving consumption, investment, and market growth.