Samir Bahl, CEO, Investment Banking, Anand Rathi Advisors Ltd, said: "As navigating the current economic landscape in India, we strongly believe that an increase in the standard deduction is imperative to alleviate the financial strain imposed by the rising cost of living. The steady inflation and other economic factors have significantly elevated our day-to-day expenses, making it challenging for many of us to make ends meet.

"By increasing the standard deduction, the government can provide much-needed relief to taxpayers.”

Atul Thakkar, Director, Investment Banking, Anand Rathi Advisors Ltd, said: "Standard deduction has remained largely stagnant from FY 2004-05 to FY 2022-23 leading to minimal savings in taxable income for salaried individuals. An increase in standard deductions will lead to increased spending and consumption which will indirectly increase GST revenue for the government. In our humble opinion, we propose that standard deduction should be considered as percentage of total income from salary."

With the upcoming Union Budget for 2024-25 set to be an interim one for the purpose of a vote-on-account, major policy changes and announcements are unlikely, ICRA said in a report.

However, the expansion in the government's capex and the extent of fiscal consolidation would be scrutinised closely, given the implications for growth and G-sec yields, respectively.

ICRA expects the fiscal deficit target for FY2025 to be set at 5.3 per cent of GDP, midway through the expected print of 6 per cent for FY2024 and the medium-term target of sub-4.5 per cent by FY2026.