NEW DELHI: After the last year’s Budget, which laid the blueprint for economy over the Amrit Kaal, i.e., the next 25 years – from India at 75 to India at 100, Prime Minister Narendra Modi’s Government is all set to present the fifth full Budget of its second term in office.
The Union Budget 2023-24 that Finance Minister Nirmala Sitharaman will table in Parliament on February 1 will be the Government’s last Budget before the country goes to the polls in May next year. Hence, it acquires an added significance as it is expected to set the tone for the General Elections 2024.
India’s ongoing G20 presidency also makes this year’s Budget special as the global event is expected to provide a boost to the economy by galvanising tourism and hospitality sectors, which had been badly hit by the pandemic. Though the travel industry is already back on the track because of the pentup demand, it is also looking at further sops from the Budget.
Income tax slabs
Salaried people always keenly look forward to any changes in tax slabs in the Budget. It has been long since significant changes were made in the rates for individual taxpayers; so expectations are high this time around. The high difference between the corporate tax rate at 25.17 per cent and individual tax rates, where the highest slab is 42.17 per cent, is another reason that a change is being expected in the Budget 2024.
The last time the income tax rates were changed was in 2020 when a rationalisation exercise was undertaken and a new, optional tax, regime was announced, which has more tax slabs and lower tax rates. But the new regime has not found many takers.
Capital gains tax
Capital gains tax is another area where some action is required. At present, the tax rates on capital gains differ, depending on the type of capital asset. There is a difference even in the holding periods applicable for short-term and long-term capital gains. Experts are of the opinion that capital assets should be classified simply as equity and non-equity and the disparity in the holding period and tax rates should be reduced.
In order to revive investment, the industry has sought increase in capital spending to 3.3-3.4 per cent of GDP in 2023-24 from 2.9 per cent at present and further to 3.8-3.9 per cent by 2025. It has also suggested increased outlays on green infrastructure such as renewables along with traditional infrastructures such as roads, railways and ports etc. In addition, the industry is looking forward to full implementation of Gati Shakti – the National Master Plan for Multi-modal Connectivity – to bring about better efficiency in infrastructure creation.