The Finance Minister of India, Nirmala Sitharaman, will present the Union Budget 2023 on 1st February 2023, the event starts from 11 AM. This budget is of particular interest to the citizens and industry as it is the last budget before the 2024 general elections. Will the government plan to increase spending on infrastructure, or will it focus on tax relief and other financial aid? It remains to be seen.
But we have noted a few key Budget 2023 expectations from different sectors:
The government is reportedly considering increasing the basic tax exemption limit from Rs 2.5 lakhs to Rs 5 lakhs. This change would not affect individuals earning up to Rs 5 lakhs, as they already receive a rebate under section 87A. But it would eliminate the need for them to file mandatory tax returns.
Salaried taxpayers in India are eagerly awaiting the upcoming budget, as they have not seen many positive changes in the last few budgets, except for the optional new tax regime in the Budget 2020, which didn’t find favour. It is expected that the government will make the new regime more appealing by allowing certain deductions and exemptions.
Experts believe that the government may consider increasing the threshold for the highest tax rate from Rs 10 lakh to Rs 20 lakh and reducing the highest tax rate from 30% to 25%.
In 2023, the banking sector expects a significant increase in capital funding as it will play a major role in providing funds for the government's large CAPEX. However, the sector is more focused on the government's approach to privatizing Public Sector Banks (PSBs). Experts anticipate that privatizing PSBs will lead to improved operational efficiency and promote greater financial inclusion in the country.
In the 2022 Budget, Finance Minister Nirmala Sitaraman announced plans to privatize two public sector banks, but no further action has been taken. The Banking Laws (Amendment) Bill, which is crucial for the process, is yet to be presented in Parliament. According to industry sources, the government may delay the privatization of PSBs in light of upcoming state and general elections in 2024. The NITI Aayog has provided suggestions for which banks to privatize, but the government is yet to make a final decision. While major announcements are unlikely, the Finance Minister may unveil measures to promote financial inclusion and improve the efficiency of PSBs.
The classification of income from stock market transactions is overly complex, with different categorisations like speculative business income, non-speculative income, long-term and short-term capital gains. Various instruments, like stocks, bonds, units of mutual funds etc are classified under these categories based on their period of holding. Taxpayers expect simplification of taxation and alignment of multiple tenures for different asset classes or the introduction of a unified tax rate for both long and short-term assets.
Over the past year, the global equity markets have experienced a lot of volatility. However, India's equity market has been an exception, as it has performed better than other developed and emerging markets. While some experts think that high valuations may limit the market's growth in 2023, they believe that the Indian budget could keep its momentum. This could be achieved by eliminating the Long-Term Capital Gains Tax (LTCG), which currently taxes any gains beyond Rs 1 lakh at 10% if the holding period is over one year. Investors are calling for the removal of this tax, and experts believe it would give a significant boost to the markets and encourage more participation.
Various Industries have these expectations from Budget 2023:
The Finance Minister, Nirmala Sitharaman, will present the Union Budget 2023 on 1st February 2023.
Budget 2023 will begin at 11AM on 1st February 2023.
The Ministry of Finance, in collaboration with Niti Aayog and other ministries, is responsible for drafting the budget. The Budget division of the Department of Economic Affairs (DEA) in the finance ministry is the nodal body responsible for producing the budget.