Budget 2023 Expectations Highlights: The 2023 Budget session of Parliament will officially kick off tomorrow with the Economic Survey 2022-23 being tabled a day ahead of the presentation of the last full Budget of the PM Modi government before the 2024 Lok Sabha elections. Experts feel Finance Minister Nirmala Sitharaman will try to keep her pace of spending to boost growth while leaning on asset sales and shunning subsidies to shrink the fiscal deficit.
Here's - There is buzz that the FM Nirmala Sitharaman may hike the limit for the highest tax slab from Rs 10 lakh to Rs 20 lakh and reducing the highest tax rate from 30 percent to 25 percent. - Salaried may also see a hike in deduction available under section 80C to Rs 2-Rs 2.5 lakh. A hike in standard deduction from Rs 50,000 to Rs 1 lakh is also expected. - LTCG on listed shares or equity-oriented mutual fund schemes may be given exemption from Capital Gains Tax if the equity shares / MF Units are held for at least 3 years post tweaks to section 112A. - A possible increase in tax exemption limit of Rs 1 lakh to Rs 3 lakh for long-term capital gains is also seen. - The FM is most likely to address issues of jobs and look at supporting poor and middle class, but she will stay away from spending way beyond the country’s means as the government seeks to shore up investor sentiment. - Support for consumption and a strong focus on manufacturing with an emphasis on SMEs could be top theme. - FM Sitharaman is expected to increase the capital expenditure by 12.5 percent to $544 billion in the new financial year beginning April. The fiscal gap is seen narrowing to 5.9 percent of GDP, from 6.4 percent this fiscal. The government is expected to finance it partly through record gross borrowing of 15.8 trillion rupees, or 11 percent higher than the current year. - PLI is expected continue and the Centre may also tweak duty to encourage domestic manufacturing. - Budget 2023 will probably see India target asset sales of about Rs 500 billion. - Centre may likely give its flagship household scheme -- Pradhan Mantri Awas Yojana - a Rs 40,000 crore boost to improve housing among weaker sections. what to expect from the Budget 2023
Speaking about income tax relief for salary earnersVivekJalan, Partner, Tax Connect Advisory said that the personal tax rates for individuals should be reduced so that there is a degree of equity and fairness in relation to structuring decisions as well as being competitive with other countries.
Madan Sabnavis, Chief Economist at Bank of Baroda, said the 2023 Union Budget will be an exercise of managing several objectives. This will include movement to fiscal prudence, stimulating growth without accompanying inflation, garnering more resources through non-tax measures, and providing sops where necessary.
He added: “As all these objectives would run in different directions, Finance Minister Nirmala Sitharaman will exercise considerable dexterity to move ahead decisively on all counts.”
Senior Congress leader P Chidambaram has said that in the upcoming Budget 2023, the Union Government must focus on addressing issues like the impact of the global slowdown on economic growth, falling exports, and the increase in India’s current account deficit, among other issues.
The former finance minister also said that the 2023 Union Budget should focus on the danger of falling consumption which could lead to lower standards of living given the high unemployment rate and inflation.
- To encourage consumers to buy affordable homes the Credit Linked Subsidy Scheme (CLSS), which has benefited 2.54 million, should be maintained, said Neeraj Bansal, co-head and COO-India Global, KPMG India.
- Bansal also said the price cap of affordable housing requires a revision to further attract a broader spectrum of homebuyers.
- More tax breaks are specifically required from the perspective of the buyer, he said.
- The government should think about reintroducing the Section 80IBA registration deadline for affordable housing projects, benefiting builders, he added.
- He further suggested that the overall size of the Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH) fund, established under the Special Window for Affordable and Mid-Income Housing, be increased to Rs 50,000 crore.
Parliamentary Affairs Minister Pralhad Joshi said several regional parties have signalled their intent to also raise issues related to unemployment, price hikes, and the Centre's alleged bias when sharing revenue with states, but he maintained that discussion should follow the rules and be permitted by the Chair.
Union Budget 2023 is likely to announcekey aspects of its policy framework for pumped storage plants (PSP) after a gap of nearly two years. To accomplish this, the government may exempt PSPs off-river or off-stream from environmental impact assessments, which are currently mandatory.
Alok Kumar, Secretary, Ministry of Power, told Moneycontrol that they have proposed that PSPs that are off-river should get faster clearances.
India’s telecom sector wants Finance Minister Nirmala Sitharaman to reduce license fees from three percent to one percent as the capital-intensive sector seeks to upgrade technology and expand its network amid nationwide commercial deployment of 5G services.Telecom service providers have also sought the abolition of the Universal Service Obligation Fund (USOF).
Debt market participants have lowered their position in longer-duration bonds ahead of the tabling of the 2023 Union Budget on February 1. They, however, remain invested in the shorter end of the curve on expectations of another year of elevated government borrowings, investors and traders said.
"Looking at the current levels, it seems the markets are light, especially on the long end, and are expecting a heavy borrowing calendar. Chances of any positive surprise are more as major negatives are already factored in at current levels,” said Vijay Sharma, senior executive vice president at PNB Gilts.
Tax incentives, regulatory clarity regarding acceptable business models in Web3 platform, and loosening of restrictions on merchant discount rates.
- Tax incentives for businesses that support the digitization of financial services.
- Tax incentives associated to mergers and acquisitions (M&A) might result in the consolidation of a highly fragmented industry.
- Relaxed rules around Merchant Discount Rate (MDR)
- Tax benefits for Web3 based platforms would prevent the brain and capital drain that has recently been observed in digital assets, non-fungible tokens, and the Web3space.
- Synchronising legal framework for data privacy across different regulatory authorities to support efficient compliance
The Union Government is likely to boost pumped storage hydropower projects by exempting off-river PSPs from conducting environmental impact assessment.
The Finance Minister is expected to announce key aspects of the government’s policy framework for pumped storage plants (PSP) in the 2023 Union Budget that will be presented on February 1.
According to senior power ministry officials, the government is likely to exempt off-river or off-stream PSPs from environmental impact assessment in order to boost pumped storage hydropower projects.
Anita Redekar, a canteen worker from Mumbai, wishes the FM Sitharaman would announce a cut on prices of LPG gas cylinders during Budget 2023. She says: "Price of LPG cylinders is very high. Paying Rs 1100 p/m for a cylinder is steep. Being a working mother with two children who earns Rs 11,000 per month, it gets difficult to manage expenses amid rising inflation.”
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