Budget 2023: The expectations around an overhaul of the current income tax regime has gained momentum with several reports suggesting that the government is likely to announce some measures to provide relief to a large section of people.
Demands of income tax slab changes and exemption limits have seen more voices coming forward and highlighting the need of the hour.
From the middle class to the salaried section, all are expecting the change since the last couple of years.
Many experts from different industries have also underlined the need for a change in income tax structure.
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Sumit Chanda, founder and CEO, Jarvis Invest, said, “Salaried workers are the main source of the country’s tax revenue and any changes in their taxation will have a significant impact on the economic recovery. There has been murmurs about the tax exemption limit being increased to 5 lakhs from the existing 2.5 lakhs. I would certainly look forward to it. It would mean higher disposable income which can lead to higher consumption and investments. This can definitely boost the economy.”
One of the major requests which came out in a latest survey is reduction in income tax rates, which will give consumers more money in hand.
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The Axis My India survey highlighted that 26% people believe that the finance minister should lower personal income tax rates by 5%. In addition, 25% want the exemption limit to be raised beyond 2.5 lakh.
Overall, experts suggest that the Budget should focus on boosting disposable incomes of the burgeoning middle-class through favourable fiscal policies and beneficial tax regimes that should eventually lead to demand generation and accelerate consumption, said Eshwar Surana, managing director, Raj Diamonds.
Pooja Singh Rathore, co-founder, Gigzeu, said, “Budget should focus on reviving the growth of private consumption (Low per capita consumption) and increasing the capital expenditure in the country. Indian growth has been primarily fueled by a middle class led consumption especially in urban markets. However, most of our population falls in the lower income category. This is the right time that we focus on providing the money and job opportunities to people at lower strata.”
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“Cutting direct taxes and indirect taxes which impact middle and lower income group people will increase consumption level. Capital expenditure increase will create more employment and decrease the inefficiency in the system. Special package should be designed for financial/formal employment inclusion of domestic gig workers/work industry as this sector employs large populations which are informal in nature and key for increasing private consumption,” Rathore added.
Yeshasvini Ramaswamy, serial entrepreneur and CEO, Great Place to Work India, too added that the Budget should provide some changes in the income tax structure. The tax rates have not been considered for revision since FY 2017-18 and this budget may be an ideal time for revisions that will enable more purchasing power and to provide some tax relief.
“The ‘middle class’ and the ‘lower middle class’ have been impacted to a large extent due to the impact of Covid-19 for two consecutive years and pursuant to the global inflation, conditions are difficult. Their expectations may be the highest from the current dispensation,” Ramaswamy said.
The demand for affordable homes is also central to many middle class who aspire to own their first house. They demand more exemptions to manage the burden of loan.
The real estate sector is hoping that the budget would include other crucial interventions and allowances by lowering tax rates or changing tax slabs.
“The Budget should provide some personal tax relief. Moreover, doing so would increase housing absorption. An increase in the tax exemption on interest paid on home loans, an exemption on rental incomes, uniformity, and an expansion of the concept of affordable housing are needed in the forthcoming Budget,” said Abhijith Ramapriyan, CEO, buildAhome.
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