Pre-Budget Expectations 2023 Updates (January 28): Increase in Basic Exemption Limit, higher limits under Section 80C, Section 80D and tax relief for homebuyers, salaried employees and senior citizens are some of the top personal tax expectations from the upcoming Budget on February 1. (Read: Biggest budget expectations)
Ahead of the Budget speech on February 1, it has been reported that the Government is mulling various tax sops for the middle class including salaried employees, women and senior citizens. Finance Minister Nirmala Sitharaman is also expected to keep the Fiscal Deficit in check while making higher Capex allocations to boost sectors such as infrastructure and manufacturing.
Also Read: Budget Expectations Sector-Wise on Jan 27
Higher allocations for agriculture, health, education and the Narendra Modi Government’s flagship schemes are also expected. Track this space for the latest news and updates on Pre-Budget 2023 Expectations.
Ramesh Jhajharia, CEO and Co-Founder at Tradexa, says it is essential to recognize that the Indian ecommerce industry is recovering from the shocks of the pandemic. As a result, there is a need to provide additional financing opportunities at an affordable interest rate.
“Tax reductions or incentives for investment in technology and
infrastructure for D2C brand and retailers is another area that needs focus from the Union Budget 2023-24. Budget 2023-24 should also prioritise reforms to improve the process of conducting business for the MSME sector and address the competition to level the playing field for small and medium enterprises against eCommerce giants,” says Jhajharia.
“We also expect the government to come up with policies to increase the tax benefits for D2C brands or retailers on sale through their own webstores. Also there is an urgent necessity to implement policies that lower input costs, increase liquidity, promote financial inclusion and allow losses in startups to be carried forward by offering small firms with affordable financial products,” he adds.
Arjun Naik, Founder and CEO of ScanDron says drones bring increased Safety, Economy, Efficiency and Accuracy across a myriad of Industrial Verticals including Energy and Construction and Infrastructure. Drones are ideal tools for tracking and monitoring construction and infrastructure projects as they enable for quick accurate measurements at heights and inaccessible locations and also cover large areas in a relatively shorter time. The government has taken cognizance of this and has taken significant regulatory strides towards liberalizing and normalizing the use of drones for industrial and commercial applications. As the fledgling Make In India Drone Industry takes flight, challenges remain in terms of import of critical components, finance and Insurance.
“In the upcoming budget the industry needs support in terms of access to finance, insurance and a regularized import policy for critical components such as Batteries, Engines, Flight Control Electronics, Motors and Engines, which are still not available under Make in India. Standardised import policy for drone components will allow for faster technological adoption and Indianization of Drone components. Better and easier access to capital finance markets, liberalized investment policies and access to insurance will allow the Make In India drone industry to take major leaps towards maturing and becoming a sustainable mainstream industry.”
Dinesh Agarwal, Founder and Chief Executive Officer of IndiaMART says, “My expectation from Budget for MSMEs has always been the same which is the simplification of tax regulations and other compliances. Usually small businesses are a one-man army, or at best, functions with limited manpower. Hence, getting the compliances done is costly and time-consuming. Its simplification will help MSMEs to devote more time to their business and innovation.”
Anmol Bohre, Co-founder and Managing Director of EnigmaEV says that recent controversies involving the alleged misappropriation of funds under the Faster Adoption and Manufacturing of (Hybrid & Electric Vehicles (FAME) subsidy program, highlight the need for careful consideration of the long-term consequences of such incentives. It would be beneficial to allocate the FAME subsidies directly to customers’ accounts. As the growth of the EV industry depends on charging infrastructure, designated funds for the development of charging stations along major roads, both national and state is required. In this regard financial provisions to establish solar-powered charging stations in collaboration with the government to achieve zero-emission capabilities for electric vehicles is highly desirable.
Mukesh Taneja, Co-founder and CEO of GT Force says that multiple regulations for the auto industry are anticipated in the upcoming Budget. The central emphasis should, however, remain on the evolving electric vehicle space, given its potential to decarbonize India’s transportation industry. “As the EV sector may witness yet another volatile supply chain disruption if the key markets experience a downturn, so we highly await calculated EV-friendly policies in Budget 2023 that can aid in maintaining the industry’s ongoing solid growth momentum”.
Rajesh Saitya, Co-founder and COO of GT Force says that the Budget should facilitate a vast system of charging points. “There is a massive need to mandate the installation of EV charging points in all existing and upcoming housing estates and commercial properties. Moreover, we are optimistic that the FAME II subsidy will be extended well beyond 2024 in order to maintain consumer demand and accelerate EV implementation beyond metro cities.”
Akshay Verma, Co-founder of FITPASS says that despite India being the world's youngest population with an average age of 28 years, 1 in 3 Indians is classified as medically unfit, suffering from a lifestyle disease that could have been easily prevented. Therefore, we must take action to prevent our young population from becoming unfit as an unhealthy population can pose a great threat to our economy.
Verma says that to complement the demands of our young nation and to make fitness affordable and accessible to millions of Indians, following two recommendations should be included in Budget 2023:
1. Admissibility of expenses on fitness by an individual to be allowed as deduction from Income Tax Act, 1961: It is requested that necessary amendment be made to section 80D of Income Tax Act, 1961 to include expenses on fitness as eligible expenses under this head along with medical and health-related expenses. For salaried employees, a deduction from salary income may be provided on reimbursement of expenses on fitness services, similar to what is allowed for medical expenses.
2. Inclusion of Fitness Centre services in services eligible for composition scheme: It is requested to now also include fitness center services in the eligibility list of the composition scheme, as has been done for restaurant services. The whole GST is adding to the cost of services of the fitness centers thereby working as a hindrance to the growth of the industry.
Shibani Sircar Kurian, Senior EVP and Head of Equity Research and Kotak Mahindra Asset Management Company says, “Equity markets in India remained volatile for the week ended 27th January 2023. Globally as well as in India, we have started witnessing signs of inflation moderating. US CPI fell to its 1-year low at 6.5%, the sixth straight month of downtrend. In India, the December CPI fell to 5.7%, remaining within the central bank's target range of 4% (+/-2%). The fall in inflation was on the back of lower food prices, mainly vegetable prices. India’s WPI is easing faster than CPI, which bodes well for margin recovery for manufacturers in India. The Q3FY23 earnings season has seen wide dispersion between stocks. So far, at an aggregate level, Nifty earnings have been in line with consensus expectations. Going forward, market would likely take cues from the Union Budget, the upcoming RBI policy meeting as well as the rest of the earnings season. Other factors to watch out for would include global inflation data, growth trends as well as flows and any developments on the geo political front.”
Muzammil Riyaz, Founder of EVeium Smart Mobility says the Indian government has launched policies and measures to incentivise the EV industry, but the same can only be leveraged when a parallel charging infrastructure is developed.
“While we are encouraging people to opt for EVs through subsidies and incentivization, in the end, only a hassle-free experience can sustain the trust of the consumers. We expect the government to accelerate the same by allocating budgets to ramp up EV architecture that is competent, connected, and sustainable. Moreover, there is an immediate requirement to spread awareness about the auto scrappage policy in order to spur the phasing out of end-of-life vehicles, which can assist steer EV purchases even further,” says Riyaz.
Anurag Mathur, CEO of Savills India says, “While the industry will look for higher budgetary allocations, easier capital availability and greater relaxations, the middle-class population, which has not had many direct sops in the recent past, will eagerly look forward to direct benefits like tax-cuts or higher deductions. Increased funding for social welfare programs, measures to control prices of essential goods and services, and initiatives to create job opportunities, etc., will all be expected from the upcoming budget.”
According to Mathur, the real estate sector is looking to the Union Budget with expectations of further support in the form of policies that will not only benefit the industry but also have a positive impact on the overall economy of the country. “An area of high priority for the government is increasing tax benefits for home buyers. Raising the cap for deducting interest payments on home loans to Rs 5 lakh is a real need and should be a key consideration. Further, higher allocation for the SWAMIH fund will be a great help for stalled projects.”
Vinit Garg, Founder and CEO of D2C startup Mylo, says, “In line with this continued support for the local business community, we expect the Union Budget to bring in measures to help domestic manufacturers continue building a robust home-grown retail landscape. We also hope that the e-commerce sector will be given greater consideration as India has now become an economy with its own established set of online consumer brands across sectors. Lower income tax slabs to drive domestic consumption, as well as lower GST rates, will aid in this effort.”
Pronam Chatterjee, CEO of BluePi Consulting says that with businesses increasingly becoming data-driven to ensure smooth operations and smart decision-making, a tax incentive is needed for organizations leveraging new-age technologies such as data analytics, big data, AI, ML, and others.
“India is moving forward at high speed in its digital capabilities across sectors including retail, financial services, and others. Government should focus on ease of starting and doing business through tax reforms, spending on digital infrastructure, and skill development in the tech sector. There should be an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and a business-friendly capital gain tax system and other regulations that will further ease access to capital for doing business,” he says.
Umesh Gala, Partner at Dhruva Advisors that the taxation of cryptocurrencies is in a relatively nascent stage not just in India but across the globe and will evolve over a period of time. The specific provisions for taxing cryptocurrencies were introduced in the last Budget. Whilst the provisions provide clarity on many aspects, there are some areas on which clarity is sought by the crypto industry.
Karan Ambwani, India Lead at dYdX Foundation, says that there should be more focus on the Web3 and digital assets industry in the budget this year with a positive lens as it is starting to become a major contributor to the tech economy in India with many new startups forming, facilitating inflow of venture capital and creating thousands of high paying domestic and international jobs. “I expect the government to revisit the tax provisions to make it more innovation-friendly and comparable to other fintech industries in the country,” he says.