Budget 2023 likely to focus on middle class, income-tax relief expected

Nirmala Sitharaman with the Budget 2023 "bahi khata". (Image: ANI/Twitter)

Finance Minister Nirmala Sitharaman will present the Budget for the fiscal 2022-2023 in Parliament at 11 am on February 1, with likely focus on the country’s growing middle class, CNBC TV-18 has said, adding a rejig of income-tax slabs was on the cards.

The Budget 2023, which will seek to lay out reforms and steps to take India's economic growth to the projected rate of 6.8 percent, is the last full budget of the Modi government ahead of the next year’s general election.

Also Read: Union Budget 2023: Tax cuts, factory incentives: What to watch for in India Budget

In a recent meeting, Prime Minister Narendra Modi urged his ministers to highlight the steps taken by the government for the middle class. He emphasised that the “common man” should not have any doubts about his government's commitment to the middle class.

The cabinet secretary also made an exhaustive presentation in the meeting on the various measures taken for the middle-income group.

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Sources told CNBC-TV18 that Sitharaman’s fifth budget presentation since 2019 shall target India’s middle class and lower middle class, with the finance minister doing a balancing act between populism and fiscal prudence.

Also Read: Budget 2023: Here’s how the FM can manage the growth-fiscal deficit trade-off  

One of the budget announcements is likely to be on changes to the income tax structure. Sources said the government may introduce a new tax slab at Rs 8-10 lakh with a tax rate of 10-15 percent against 20 percent currently, the CNBC TV-18 report said.

The change would boost the purchasing power of the middle class. The 30 percent tax rate on income above Rs 10 lakh may also be reduced to 25 percent.

Moneycontrol couldn’t verify the report independently.

Another big theme of the Budget 2023-24 is likely to be job creation in urban areas and support for gig workers. It is likely that a scheme to support gig workers and young entrepreneurs with loans may also be introduced, the report said.