Tax Exemptions, Infra Boost, PLI Expansion — 23 Expectations From Budget '23

From major industries to MSMEs, salaried classes to farmers, and education to healthcare, everyone is eyeing some relief from the Union Budget 2023

Finance Minsiter Nirmala Sitharaman will table the annual Budget for the fiscal year 2023-24 on February 1. There are several expectations bound with the finance minister's fifth Union Budget. In the final full-year Budget before the general elections in 2024, the Narendra Modi-led government may also try to appease every sector of society to consolidate its grip on power. From major industries to MSMEs, salaried classes to farmers, and education to healthcare, everyone is eyeing some relief from this Budget. 

We have listed 23 major expectations from Budget 2023

Income Tax

1. Taxpayers are hoping for further exemption in the current taxable income from Rs 2.5 lakh per annum to Rs 5 lakh per annum. According to experts, this may result in extra savings of approximately Rs 1,000 per month for all taxpayers.

2. Salaried individuals also hope for the exemption ceiling under 80C to be extended from the current Rs 1.5 lakh to Rs 2.5 lakh in a fiscal year. 

3. Currently, an individual can claim a deduction for health insurance premiums and expenses for up to Rs 25,000. Experts say that given the increase in medical expenses, the limit should be enhanced to Rs 50,000. 

4. The salaried class is also hoping for some rationalise in the new tax slab structure. Introduced in Budget 2020, the new tax regime has lower rates of taxation but there is no option to claim any deductions on house rent allowance, investments, insurance premiums etc. 

Education Sector

5. Over the past 50 years, spending on education has been hovering around 3 per cent of the GDP. The government spending on education in most of the developed countries is upwards of 6 per cent of their GDP. Given India’s size and population, the education sector is demanding spending to be more than 6 per cent of the GDP.

6. Experts say there should be a special focus and funding to create high-quality research-intensive universities. The investment can be channelled into strengthening the research of specific existing public universities through funding towards the infrastructure and intellectual capital.

Infrastructure Sector

7. The next Budget is likely to continue in the same way to provide impetus for growth through investment in infrastructure in the next fiscal as well. Budget 2023 may witness the country stepping up on capital expenditure with a main push on PM-GatiShkti and national infrastructure pipeline (NIP) targets. 

8. The rating agency ICRA expects the government’s focus to be on urban infrastructure with increased allocation of funds towards urban transportation, water supply, sanitation and sewage management in Budget 2023.

9. Based on Rs 7.5 lakh crore allocation in the current Budget, it is expected that the capital expenditure target could be Rs 9.0-10.5 lakh crore in FY24 in order to provide a fillip to infrastructure development and capacity expansion to create demand, generate employment and support the growth recovery.

10. Experts say the contribution of divestment would be crucial in a situation when the government needs funds to spend on infra projects and address the challenge of maintaining the fiscal deficit target. 

Health Sector

11. As per experts, the healthcare sector needs commercially low capital-intensive projects at district and taluka levels to address large patient volumes and access affordable pricing for quality services. 

12. The healthcare industry is also waiting for the government to enhance its budgetary support in increasing healthcare and insurance penetration following the pandemic.

Agriculture Sector

13. According to industry experts, the government should enhance cash assistance given to farmers under the PM-KISAN scheme from the current Rs 6,000 per year for the purchase of crop inputs, provide tax incentives to agri-tech start-ups and cut import duties on agrochemicals.

14. There is also a need to announce some incentives to farmers as well as agri-tech startups for faster adoption of technologies, like artificial intelligence, precision farming and drones, in the Indian agriculture sector.

15. Edible oil industry body SEA has also demanded that a national mission should be launched to increase oilseeds production and reduce imports of cooking oils.

Real Estate Sector

16. Real estate developers are primarily expecting support in terms of higher tax exemption on the home loan interest under Section 24 up to Rs 5 lakhs from an existing Rs 2 Lakhs per annum. 

17. They also believe that the capital gains tax rate should be decreased from the current 20 per cent. The Rs 2 crore ceiling on capital gains for reinvesting in two properties needs to be also relooked at as such measures with bring about the much-needed easing of capital gains. 

Start-ups 

18. The Centre is likely to extend fiscal incentives for the production of toys, bicycles, and leather and footwear in the upcoming Union Budget as it looks to expand the production-linked incentive (PLI) scheme to cover more high-employment potential sectors. 

19. The union government will also need to simplify and separate the tax frameworks for Private Equity and Venture Capital investors, along with start-ups. The industry is demanding that there should be a parity for capital gains tax between listed and unlisted securities. 

20. Industry leaders say that there is an urgent requirement for reform in the minimum alternative tax (MAT), which should be reduced from 15 per cent to 9 per cent, as it would help smaller businesses meet their daily working capital requirements. 

Fintech Industry

21. Measures such as the implementation of a national digital ID system and the development of digital infrastructure in rural areas will assist in bringing more people into the financial system, allowing them to enjoy the benefits of fintech.

22. The government is expected to announce measures to support innovation and research and development in the fintech sector, such as funding for R&D and tax incentives for companies that invest in new technologies.

EV Sector

23. The electric vehicles (EV) industry expects a revision in the customs duties, import duties, and GST levied on li-ion cells, li-ion battery packs, li-ion cell components, and EV components. They demand current 18 per cent GST on li-ion cells, cell components, and battery packs should be exempted to facilitate the battery manufacturers in the production of EV batteries.