Salaried individuals are looking forward for the upcoming Union Budget 2023 in anticipation of the central government announcing some important measures to reduce the burden of income tax.
Streamlining the income tax remains a major demand among the salaried class as the government has not announced major reforms in recent years. While an optional income tax was announced, it turned out to be very counterproductive in terms of relief.
Salaried people make up the largest group of taxpayers in the country, and many experts believe that the government should announce some easing measures in the upcoming Budget 2023, with the aim of making the new income tax system attractive or reducing the tax regulations of the old system. Various appeals were also made to increase the standard deduction of Rs 50,000, applied under the old income tax system.
Tax relief is unlikely
While experts feel that the wage earners demands are justified in the wake of slow post-pandemic income growth and high inflation, they are not overly optimistic about such announcements in the next budget.
Many economists have already seen that the government faces a difficult challenge in the upcoming fiscal year, given the deteriorating global economic environment and the possibility of a slowdown in nominal GDP in Fiscal year 24.
Focus on long-term growth and fiscal consolidation
The government's main objective in the run-up to the 2024 general election will be to grow up the economy on a long-term growth path, while remaining fiscally prudent.
"We hope that the budget charts a path towards some fiscal consolidation," Taimur Beg, director general of DBS, told the Reuters news agency. He also said much of the spending could revolve around infrastructure development, which would support growth through job creation.
In addition to long-term growth, the government will also focus on reducing its fiscal deficit in light of lower exports amid the global economic slowdown in the next fiscal year. A Reuters poll of economists also indicates the government will focus more on consolidating public finances and cutting unnecessary spending to remain immune to external headwinds.
Although the Budget 2023 will be a crucial text for the central government ahead of the 2024 general election, most economists believe Finance Minister Nirmala Sitharaman will avoid increasing spending and take a balanced path aimed at stabilization. In such a scenario, the possibility of taxation in the next budget seems unlikely.
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