Budget 2023 Expectations: What to Expect on February 1, 2023 Budget?

Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on February 1. This budget is especially significant as it is the last budget of the Modi 2.0 government before the 2024 elections.

Capex, manufacturing, infrastructure, and rural economy are likely to take a front seat in this year’s budget. There is a lot of discussion over overall growth which could possibly be the direction of this upcoming budget.

The time frame of the entire budget session is estimated to begin on 1st February 2023 and last till 6th April 2023. Many are expecting this budget to work towards providing the common man with some sort of Income Tax relief. We are looking forward to steps towards the creation of new job opportunities as well as the allotment of greater funds to the agricultural sector. The government is expected to try and balance capital expenditure and fiscal deficit.

Hemant Sood, Founder at Findoc, had this to say about the budget, “Fintech Companies are subject to corporate income tax rates. The GST is charged at a rate of 18 per cent on services rendered by fintech businesses that are mentioned in Section 65(12) of the Finance Act, 1994. We expect the government to reduce start-up taxes across the board with no GST until Rs 10 crore turnover annually. We believe that this could help SMEs build a stronger economy and aid in more jobs,”

When it comes to the healthcare sector new innovatory ideas are something every expert is laying emphasis on. One of the most prestigious names in the industry, Lakshman T L, the CEO of Milann Hospitals said that “The healthcare industry is urging the government to increase spending on R&D, the adoption of new technology, and innovation in the healthcare sector in Budget 2023. The current barriers in the sector must be addressed, and measures are taken to further strengthen its core. Furthermore, the industry body PHD Chamber of Commerce and Industry recently expressed that the health budget is in dire need of a hike of 30 to 40 per cent to fulfil the bulging needs of the healthcare sector and build a healthy human resource for the nation.”

He further elaborated by stating, “Previously, the Ministry of Health and Family Welfare received INR 86,201 crore in the Union Budget 2022–23, a significant increase of nearly 16.5 per cent from INR 73,932 crore in FY 2020–21. A further surge is expected for Budget 2023 as the sector needs to keep developing sustainable healthcare infrastructure and ensure system readiness to handle the country’s rising healthcare demands. Owing to the sharp increase in non-communicable and lifestyle diseases, the upcoming budget is also likely to place a strong emphasis on preventive healthcare.”

Even though since the Financial Year 2017-18, the tax rates haven’t been altered in FY 2020-21 a new tax regime focussing on individual taxpayers with lower tax rates was introduced. However, the downside to it all was that to avail of these benefits taxpayers had to give up on many deductions that they were otherwise eligible to claim.

In this new budget, taxpayers are expecting the highest tax rate to drop from 30 per cent to 25 per cent which should apply to income higher than Rs.20 lakhs per annum. Since the current slab covered by the 20% rate is between Rs.10-12.5 lakhs to Rs.10-20 lakhs, individuals are expecting this slab range to also widen.

We are also hoping for an Exemption with respect to PF contribution. According to the 2020 Budget 2020, an employer’s contribution (into PF, NPS and SAF) that went beyond Rs 7.5 lakhs in any Financial Year are also taxable as a “perquisite” in the hands of employees. In fact, even the withdrawal of these funds became taxable. In this budget we expect the government to outline the regulations and procedures to eliminate double taxation of any part of the collected PF/NPS/SAF balance that may have already suffered tax in the year of donation.

As the housing costs are multiplying exponentially and the number of salaried taxpayers who inhabit some non0metro cities like Hyderabad and Bangalore are two of the major causes that could prove to be a push for the government to bring in some kind of Exemption for House Rent Allowance (HRA). We can expect their inclusion to fall under the 50 per cent category

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Author: Saanvi

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