Union Finance Minister Nirmala Sitharaman will present the Union Budget 2023-24 on February 1. The government is expected to focus on infrastructure development and announce some exemptions for people in the form of tax benefits.
All eyes are on how the government plans its spending and controls fiscal deficits and inflation. If the government spends more than expected on capital expenditures and revenues, the fiscal deficit is likely to increase. This can lead to an increase in market borrowing by the government, putting pressure on interest rates and causing inflation.
Lower fiscal deficit
Goldman Sachs said India could cut its fiscal deficit target by 50 basis points for the next fiscal year beginning April 1, 2023. Goldman economists, including Andrew Tilton and Santanu Sengupta, wrote in a report that India would maintain its deficit at 5.9 percent of GDP in the new fiscal year.
Economists have observed that the central government will increase welfare spending while maintaining capital spending. The economists predicted that "rural jobs and housing are likely to be in the limelight."
The current tax slab has a basic exemption limit of Rs. 2.5 lakh for individual taxpayers, which has not changed since 2014-15. This means that people whose income is below this threshold are not required to file tax returns. Now the income tax exemption limit is expected to rise to Rs. 5 lakh in the next budget.
Additionally, taxpayers anticipate a doubling of the standard deduction from 50,000 to 1 lakh rupees. According to experts, the standard deduction limit should be doubled to account for the rising cost of living and rising inflation.
Spending on Infrastructure and Social schemes
Infrastructure spending is also expected to increase in this year's budget. With this, it is likely that large infrastructure projects will be launched in the coming years. Since this will be the budget before the 2024 general elections, the government is expected to allocate more money to infrastructure projects and social sector welfare plans in Budget 2023.
Enhanced Home Loan Deduction Limit
Taxpayers can take advantage of deductions on interest paid on the mortgage loan under Section 24 (b) of the Income Tax Code. However, this deduction is set at 2 lakh per year. With the rise in real estate prices in recent years, the discount limit is likely to increase.
Also Read: Budget 2023: Will Nirmala Sitharaman provide some tax relief to India’s salaried class?