5 key expectations from Budget: Will Nirmala Sitharaman cheer up middle class?

Here are 5 key expectations from the Union Finance Minister Nirmala Sitharaman ahead of the Union Budget 2023. 

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Rejig in the Income Tax

Middle class is expecting a rejig in the income tax exemption limit from ₹2.5 lakh to ₹5 lakh, and in the standard deduction from the current ₹50,000. Expectations are high that Finance Minister will hike Section 80C deduction limit of ₹1.5 lakh for investments in PPF, tax-saving mutual funds, national savings certificate etc., is also widely anticipated. Additional concessions in the new tax regime (announced in budget 2020) to make it more attractive are are also expected.

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Tweaks in Capital Gains tax

There is a big demand that the government will bring about uniformity in holding period of capital gains tax between different asset classes. Equity has a 10% tax on long term gains while debt mutual funds are taxed at 20% with the benefit of indexation.

Boost corporate tax/indirect tax reforms

To take the corporate tax reforms to the next level industry seeks and extension in the concessional 15% tax rate on new manufacturing companies, which expires on 31 March 2024. Industry has sought an extension of one to five years. On GST, the Finance Bill 2023 is expected to deny input tax credits for corporate social responsibility spending.

Balancing act between Atma Nirbharta and imports

Atma nirbhar Bharat has been the theme of the Indian government for quite some time due to which the previous budgets have focussed on import substitution, where customs duties have been raised to provide impetus to domestic manufacturers. This year’s budget is expected to hike in duties -- from private jets and helicopters to electronic goods, plastics, items of iron and steel, jewellery and leather. The idea is to arrest India’s overall trade deficit in general and with China in particular.

More money in hands of rural India 

Rural India will be expecting a push to improve incomes and increase demand. Farmers expect an increase in the cash transfer scheme PM Kisan to compensate for rising input costs and to boost non-farm wages the government is expected to allocate more funds for rural jobs, housing and roads. The government is expected to provide more funds to incentivize farmers to switch to natural farming.