• Notification Date: 11-01-2023
• Notification No: N/A

Budget 2023 to Provide Some Tax Relief to India’s Salaried Class?

Salaried individuals are looking forward to the upcoming Union Budget 2023 with high hopes. They are anticipating that the central government will announce some important measures to reduce their income tax burden. Income tax rationalisation remains a key demand among the salaried class. The government has not announced any major reforms over the past few years. While an optional income tax was announced, it has proved largely counterproductive in terms of providing relief. 

Salaried individuals make up the largest group of taxpayers in the country. Hence, many experts feel that the government should announce some relief measures. Reforms should be brought aiming at either making the new income tax regime attractive or lowering tax slabs under the old regime. Several appeals have also been made to increase the standard deduction of Rs 50,000, applicable under the old income tax regime. 

Experts feel that the demands of salaried individuals are justified due to the slow income growth after the pandemic and rising inflation. But they are also not being too optimistic about such announcements in the upcoming budget. Several economists have already opined that government faces a tough challenge in the upcoming financial year. The worsening global economic environment, and the possibility of a slowdown in nominal GDP in FY24 are the major reasons behind it. 

The key goal of the government in the run up to the general elections in 2024 would be to support the economy with a pipeline for long-term growth, while maintaining fiscal prudence.  

Taimur Baig, who is also a managing director at DBS stated that “we expect the budget to chart a path towards some fiscal consolidation”. He also said that much of the expenses could centre around infrastructure development, which will support growth with job creation. Aiming at a long-term growth, the government will also focus on bringing down its fiscal deficit in view of lower exports amid the global economic slowdown in the next financial year. A poll of economists also indicates that the government will focus more on fiscal consolidation. It might cut down on unnecessary spending to keep the economy immune from external hurdles.  

Even though Budget 2023 will be a crucial text for the central government before the general elections in 2024, most economists feel that Finance Minister Nirmala Sitharaman will avoid higher spending and take a balanced route aimed at stabilisation. In such a scenario, the possibility of tax sops in the upcoming budget seems unlikely.