Here's What You Can Expect from Budget 2023
The Situation as It Stands
What People Want from the 2023 Union Budget
●Better tax benefits and waivers for senior citizens.
●Raising the upper cap of the deductions that can be claimed for health insurance premiums.
●Ample allocations for the healthcare infrastructure and health insurance sectors.
●Respite from high home loan rates so that the lowest segments of society can also be encouraged to take home loans.
●Addressing the tax treatment for mutual funds and other investment avenues.
●Better income tax benefits that cater to the common man.
What Numbers Does Union Budget 2023 Need to Contend With?
●In 2021, the first quarter saw a 13.5% growth in GDP, while the second quarter only clocked in at a 6.3% growth, adding to the fear of an upcoming economic slowdown.
●As FY 2022-23 marked a GDP growth of 8.7%, the First Advanced Estimates (FAE) of GDP have pinned GDP growth for FY 2023-23 at 7%.
●NSO estimates India’s GDP to grow by 9.7% in the first half (2022-23).
●In the current fiscal year, ending in March 2023, India has budgeted a deficit of 6.4% of GDP. The government plans to bring this deficit down to 4.5% of GDP by FY 2025-26.
What People Expect from the 2023 Union Budget
Tax Sops and Slab Rate Revisions
Encouraging the Lending Sector
Several NBFCs and gold loan companies in India have expressed a wish for the budget to cover two aspects:
●Measures to ensure ease of doing business.
●Measures for the implementation of lending.
RBI’s scale-based regulations for NBFCs and policy for inflation control may lead to increased NBFC borrowing costs. But respite in gold loan interest rates, loan against property interest rates, and increased deduction limits for housing loans are some aspects that NBFCs are looking forward to.
Growth of the MSME Sector
The micro, small, and medium enterprises (MSME) sector generates more than 120 million jobs in India and is roughly 33% of the country’s GDP, close to 50% of its exports (2022) [Source 1, Source 2], and the MSME loan market had already grown to Rs 35.4 lakh crore in the first quarter of 2022. To promote India as a manufacturing destination, the government already has several initiatives in place, including simplified access to the MSME loan market, non-tax benefits, etc. Now, the industry expects enhanced working capital access, accelerated flow of credit, improvement of processes for conducting business, greater investment in innovations, better tax benefits, and other similar inclusions in budget 2023.
Housing for All
Despite the government’s aim to provide ‘housing for all’ and the ease of getting a home loan in India, factors like RBI’s repo hike and the interest payout involved in getting a home loan in India are still not very affordable for many. As interest rates for loans (against property, gold, personal, etc.) are on the rise almost everywhere, an increase in the deduction limit for interest paid in repayments for a home loan in India is one of the most expected inclusions in the budget. Other expectations include income tax relief for second home purchases, reduction of the capital gains tax, tax benefits for rental income, etc.