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India is one of the largest economies in the world. Thus, India’s economy and budget will have an impact globally as well. As such, India can highlight its efforts to create a circular economy in its Union Budget 2023.
As India’s Finance Minister, Nirmala Sitharaman, gears up to present the Union Budget on February 1, everyone has one question. And that is – What can you expect from India’s ‘Budget 2023′?
The answer is not as simple as it is.
As per India’s Chief Economic Advisor, V Anantha Nageswaran, by the 2022-23 fiscal year’s end, the country’s GDP will be USD 3.5 trillion at current prices. The projections show it rising to USD 7 trillion over the following seven years.
On October 11, 2022, the International Monetary Fund (IMF) joined other international organizations in lowering its projections of India’s GPD growth in 2022 to 6.1%.
Despite this, India is expected to have the highest economic growth rate of any major economy. Followed by China (4.4%), Saudi Arabia (3.7%), and Nigeria (3%).
Given the anticipated progress of India’s economic status, here are a few things you can expect from Budget 2023!
Banks, one of the country’s most important financial institutions, analyze the Union Budget each year.
Analysts spend a lot of time assessing how banks should adjust their strategies for the following fiscal year. We can look back on last year’s budget and see that it was both wise and helpful in meeting the challenges of the time.
The financial industry anticipates the announcement of groundbreaking measures to boost its development. It expects the Narendra Modi government to streamline the capital gains tax framework. How? By standardizing holding periods and rates for equities, debt, and other asset investments.
For instance, the following may have their holding duration (for LTC classification) shortened from 36 to 24 months:
The International Financial Services Centre (IFSC) is becoming a popular location in the financial sector. To make it more attractive, the government may address the following in Budget 2023:
Deloitte India’s Partner, Poorva Prakash, suggests an adjustment of income tax brackets for 2023-24.
“Bringing down the income tax slabs would be very useful because it would increase the purchasing power in the hands of the individuals, and it would also provide a good tax relief. Not just corporate tax rates, revision in tax slabs would also bring them at par with rates in the neighboring countries like Hong Kong and Singapore, where the tax rates are 17% or 22%.”
~ Poorva Prakash to TOI (source)
The expansion of fintech is important for digitalizing financial services across India.
Fintech firms expect more government support for improved bank partnerships to boost the current model. Particularly in areas like the practicability of the first loan default guarantee (FLDG) clause.
Like many others, it anticipates that the relaxation of direct tax and GST rates over the next several years will allow for quicker development.
Opportunities are endless in areas like –
Thus, the government’s task is to provide enough tax exemptions and simplify conditions for players in the industry to spur real growth in these new sectors.
The forthcoming elections in two major states, Madhya Pradesh and Rajasthan, plus the Government of India’s (GoI) attempts to enhance agricultural incomes, suggest that the agriculture sector would be a focal point of Budget 2023.
Agricultural groups urged the government to allow the sale of agricultural products such as wheat abroad. And to limit importing goods below the minimum support price (MSP).
As an alternative to palm oil, farmers would want to see the government prioritize the production of locally grown oilseeds. These include soy, mustard, peanut, and sunflower. During their meeting with Sitharaman, farmer organizations also requested increased taxes on processed goods.
The GoI is expected to focus on programs to boost crop realizations and non-farm incomes, with the Mahatma Gandhi National Rural Employment Guarantee Act and initiatives to boost the non-farm economy and income receiving greater budgetary allocations.
Additionally, funding for agricultural initiatives will likely remain a priority in the future. These include irrigation system expansion, crop insurance, and increased access to agricultural financing,
The agri-input industry, which includes agrochemicals, fertilizers, etc., stands to gain as long as agriculture remains the primary emphasis.
Telecom, another crucial industry, has lobbied for a reduction in license fees to 1% and a customs tax remission on network equipment for 5G deployment. The Cellular Operators Association of India (COAI) urged eliminating the Universal Service Obligation Fund (USOF) as part of the Budget 2023.
The telecom association requested that the government simplify the GST, reduce the license price from 3% to 1%, and eliminate customs duties on 5G network equipment. The industry also requested the elimination of GST on license fees, spectrum use fees, and the cost of the auctioned spectrum during the negotiations leading up to the Budget.
Keeping a close watch on Budget 2023 is critical since it is bound to impact all industries and sectors. It may even significantly change tax filings, policy tax, company finance, and more.
We are optimistic that after reading this blog, you now have an idea about Budget 2023. However, if you still have any doubts, it’s best to talk to an expert accounts company like GJM & CO. GJM’s experienced accountants and finance professionals will help you understand the Budget 2023, tell you what you can expect as a business owner, as well as help you prepare for them.
Should you have any queries or need consultation, Schedule a Call today or write to us at info@gjmco.in.