5 Expectations From Union Budget 2023-24

1. Income tax slab for Salaried Class

The salaried class in is looking at the budget hoping  the income tax structure should be changed in the Budget. According to reports, the government is considering raising the basic tax exemption limit from Rs 2.5 lakhs to Rs 5 lakhs. A new tax regime was introduced; however, it was not adopted by the majority of taxpayers due to its unavailability in comparison to the old tax regime. Apart from a new optional tax regime in the 2020 Budget, there hasn't been much to cheer about for India's salaried class in recent budgets. Individual taxpayers are therefore anticipating significant benefits from the upcoming budget.

2. Budget Expectations for Stock Markets

The equity markets worldwide have witnessed turbulent times over the last one year. However, even amidst such uncertainties, the Indian equity market has been an outlier as it outperformed its developed and emerging peers. Also, the number of Demat Account rise in the past few years. In December 2022, the Demat Accounts rise to 34% to 10.8 crore.

The Long-Term Capital Gains Tax (LTCG) repeal may drive the stock and mutual fund markets. Currently, if a stock investment has a gain after a holding period of more than a year, that gain is subject to a 10% tax. However, investors want this tax removed. Notably, experts think that such a move would give the markets a big boost and boost stock market participation even more.

3. The Indian Corporates' Expectations

Corporates and organisations, particularly smaller businesses, experienced stress during the Covid-19 pandemic. Lockdowns had a negative financial impact on most businesses because they affected manufacturing and production. As a result, the expectations are from budget 2023.

Currently, there are different tax rates for various industries. The corporate sector anticipates that a similarity in tax rates should be implemented in order for India to stand as a hub for both the manufacturing and services industries. Currently, there are different tax rates for various industries. The corporate sector anticipates that a similarity in tax rates should be implemented in order for India to stand as a hub for both the manufacturing and services industries. India will have one of the most globally competitive corporate tax rates if the 15% corporate tax rate is implemented.

Also, in order for India to continue to be a competitive and profitable market for foreign businesses setting up their branches here, corporations are hoping that the Union Budget of 2023 will offer some concessions for Indian branches. 

4. Additional incentives for homebuyers 

One of the most important industries in our economy is real estate and home buyers are a key players in this sector. The industry has been severely impacted by the current economic downturn including the interest rate hike. The expectations of the budget are held by homebuyers. They hope the government offers more incentives to increase rental and affordable housing, as well as increase the housing tax credit rebate under Section 24 (b) from Rs. 2 lakh to at least Rs. 5 lakh. According to experts, the home loan and real estate sectors are expected to be significantly impacted by rising interest rates. Affordability will become a major issue for buyers going forward due to rising rates.

5. Tax benefits for startups

Startups play a crucial role in the development of jobs all across India in addition to bringing a multitude of disruptive inventions to market. In terms of entrepreneurship, the Indian government is already at the forefront of promoting a number of new measures to solidify India's position as the world's economic leader. However, we feel there are a few recommendations from investors' perspective that need to be looked at. The startups are expecting that a single window clearance will be made available so that start-ups can claim an exemption or deduction under the Income-tax Act without having to register with numerous authorities. SMEs will benefit from this as the economy is strengthened.

Bottom Line

The middle class is looking at the Union Budget with a strong emphasis on job creation initiatives. The 'middle class' and the 'lower middle class' have been impacted most due to the impact of Covid-19 for two consecutive years and pursuant to global inflation and constant revisions in the repo rates. The government must act to generate jobs in vital sectors if it wants to provide opportunities for the middle class to make a living.