One of the predominant expectations from Budget 2023 is tax relief for the salaried class. All-around expectation is introduction of favourable tax slabs, and a waiver of long-term capital gains from equities. “A budget expectation this year is a relief for income taxpayers. The basic exemption limit of Rs 2.5 lakh was fixed in 2014 and, therefore, needs revision. Raising the exemption limit to Rs 4 lakh is likely. This relief is likely to be offered in the no-exemption regime since the government wants this regime to take off. Rationalisation of the capital gains tax regime is another expectation,” noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
An equally ubiquitous view states that simplifying India’s tax regime is crucial in order to encourage private and foreign investments. Reducing taxpayers’ burden and levying hefty fines on defaulters is the way forward.
“The effort of the government to simplify taxes has boosted the tax revenues to GDP ratio to 17.10%, an almost 2x increase in tax collections. The massive boost should be a learning for the government. They should reduce the tax burden on individuals by increasing the minimum threshold, reducing the number of slabs, and cutting taxes across all slabs, but increasing the penalties for tax crimes. A continued effort to simplify the tax code will continue to provide confidence to global investors who wish to invest in India but are fearful due to the complex tax code,” Anirudh Damani, Managing Partner, Artha Venture Fund, stated.
Additional expectations include a higher exemption on health insurance premiums under Section 80D and an increase on tax waiver on the National Pension Scheme (NPS) from 60% of the maturity to 75%. Similar tax relief is anticipated for senior citizens as forecasts include the introduction of new tax slabs with lower tax rates, an increase in the limit of tax-saving investments under Section 80C of the Income Tax Act for senior citizens, and an increase in the limit of gratuity and provident fund. Moreover, social security benefits for senior citizens, such as pension schemes and healthcare benefits are at the forefront of the expectations.
