Budget 2023 Expectations Live Updates: How FM Sitharaman can help India's middle class beat inflation

Budget 2023 Live Updates For Homebuyers: "In order to curtail inflation and promote growth, the Reserve Bank of India went on a repo-rate hiking spree in the year 2022. It has hiked the policy rate by 225 basis points since May 2022 and we may expect the central bank to increase the policy rates a few times in 2023 as well," said V Swaminathan, executive chairman, Andromeda Loans and Apnapaisa. 

"With the Union Budget 2023 around the corner, the government may introduce conducive measures to provide relief to borrowers. Hopefully the government will consider the long-pending demand to enhance the deduction limit against home loan interest from Rs 2 lakh to Rs 3 lakh," he added.

Budget 2023 Live Updates: HSBC expects Union Budget to choose macro stability over growth

Budget 2023 is expected to prioritize macro-economic challenges over growth and focus on providing a credible fiscal consolidation roadmap, according to Pranjul Bhandari, chief India economist at HSBC Holding Plc.  
High inflation and widening trade deficit that posed macroeconomic stability challenges last year will lessen in severity, but growth will taper off too, Bhandari said in an interview Monday with Bloomberg Television’s Rishaad Salamat. “It’s hard for the two to co-exist.” 
The upcoming Union Budget on February 1 will be the final-full year Finance Bill before Lok Sabha elections in 2024, and comes as high interest rates temper demand globally and at home. 
In such a scenario, the government will look to bring down fiscal deficit to a “more sustainable” level, Bhandari said, pegging the gap at 5.8% of the gross domestic product for the financial year starting April 1, from 6.4% in the current year. The restructured food subsidy bill and improved expenditure efficiency will help, she added. 
The manufacturing sector may see some more incentives, especially in the electronics and small scale industry, but the government “would not be extremely profligate,” Bhandari said. 
The Reserve Bank of India may increase its benchmark rate by 25 basis points in Feb 8. monetary policy announcement, “but we also think this is perhaps the last rate hike for now,” she said, as softening food prices bring down the overall headline inflation within the target 2%-6% range. 

Budget 2023 Live: YSR Congress demands caste-based eco census at all-party meet ahead of Budget 

The YSR Congress on January 30 demanded a nationwide caste-based economic census at an all-party meet convened by the government ahead of the Budget session of Parliament.

The party said that it is necessary to know the economic status of the backward castes who are "lagging behind" on social and development indicators. Backward castes account for over 50 per cent of the total population and the census will help find their economic status, YSR Congress leader Vijaysai Reddy said. The ruling party in Andhra Pradesh has joined the likes of the JD(U) and the RJD, both of which have demanded a caste census.

Budget 2023 Live Updates: Various deductions limits should be enhanced

Given the sluggish growth in the housing sector, the exemption limit of Rs 2 lakh on home loan interest payment should be raised to Rs 3 lakhs. Two-fold benefits will be a relief to salaried-voters in the next 16 months election season & also a push to dawdling the real estate sector which accounts for 8 per cent of GDP, said Shailendra Kumar, Chairman, TIOL Knowledge Foundation, a fiscal think tank.

"Given the precipitous drop in the national gross savings from 37 percent to 27 per cent, the perimeter of Sec 80C needs to be expanded to RS 2.5 lakh. This will put more money in the hands of the government to bankroll the infrastructure sector or higher capex."

A complete recast of capital gains regime is overdue. The I-T Act needs to be decluttered and level-playing is required in the treatment of different assets. Given the exigency of health expenditure, and the risk of fourth Covid wave, Sec 80D limit should be hiked to Rs 40,000, he said.

Budget 2023 Income Tax Expectations: Personal tax rates should be rationalized and brought in line with the corporate tax rates

It has become an urgent necessity to reduce the personal tax rates for individuals so that there is a degree of equity and fairness in relation to structuring decisions as well as being competitive with other countries. Because, after the reduction of corporate tax rates a few years back, the differential between personal and corporate tax has widened. 

"The highest marginal rate for individuals has now gone up to 42.74% (highest slab) against the normal Corporate Tax Rate of 25.17%. The high personal tax rate for individuals in India stands out as an exceptionally high rate as compared to other countries. For example, the maximum rates of personal income in Hongkong are 15%, Sri Lanka – 18%, Bangladesh – 25% & Singapore – 22%.  Further, the huge gap in the tax rates as mentioned between individual and corporate tax rates is leading to several structuring decisions being adopted in favour of the corporate model (for example, proprietorship business moving to company format)," said Vivek Jalan, Partner, Tax Connect Advisory, a multi-disciplinary tax consultancy firm.

"Further, The Finance (No.2) Act, 2014 had fixed an overall limit to Rs.1.5 lakhs in respect of deduction under section 80C of the Act. Even if we consider an inflation of 6% per annum, the deduction Needs to increase to at least Rs.2.5 Lakhs. This would act as a fillip to investments and also generate greater savings for the taxpayer," he added.

Budget 2023 Live Updates: Deductions limit should be raised in line with inflation

"80C is the only general Income Tax section available to everybody for saving some tax. This section covers a huge canvas from PPF/EPF, ELSS, NSC, NPS and SSY to Life Insurance policies, tuition fee and principal part of home loan. Even after increasing it to 3 Lakhs, a major part of one’s investments in these instruments for a middle-income person remain taxable," said Col. Sanjeev Govila, CEO, Hum Fauji Initiatives, a financial planning firm

"The 80C limit was last revised from Rs 1 Lakh to 1.5 Lakhs in FY 2014-15, 8 years back, when the Cost Inflation Index (CII) was 240. It is 331 now and considering current inflation only at 6%, it comes out to about 351 for the next FY for which this increase is being discussed. With that, the current limit should be about Rs 2.19 Lakhs.However, also considering that the Govt takes an unduly long time to revise this limit, it should go to at least Rs 2.5 Lakhs, and preferably to Rs 3 Lakhs," Govila added.

Budget 2023 Live Updates: B Gopkumar, MD & CEO, Axis Securities on economic growth

As this is the last full-year Budget before the Union Election in 2024, we expect it to be growth-oriented. The primary focus of the Budget is likely to be on job creation and investment-driven growth. The real estate sector may get a boost with some announcements to expand the current income tax benefit for housing. Measures to stimulate rural spending and infrastructure development would be the highlight in the Budget. Any roadmap to build and bolster the entrepreneurship culture can promote self-reliance and go a long way in employment generation. Overall, with its focus on growth and development, this Budget may have something for everyone. FMCG, Manufacturing, MSME, and Banking are a few sectors that may see action.

Budget 2023 Live Updates: Government likely to continue to ramp up capital expenditure

Finance minister Nirmala Sitharaman could unveil big spending plans in the Modi government’s last full-year Budget as the Indian economy tries to ward off dangers emanating from the global economic slowdown.

The spending push is critical for crowding in private investments, which could see some hesitancy as pent-up demand slows in the next fiscal.

The government is expected to continue its plan to ramp up capital expenditure in Budget 2023-24, with a special focus on states’ spending on capital assets.

This is in line with the previous budget that saw a bumper hike in the Centre’s capex plans, aimed at pump-priming the economy, reeling under the COVID shock.

Budget 2023 Live: Ease of doing biz, tax relief expected from Finance Minister

"Last year, the budget was predominantly inclined towards the masses and promoted a lot of serious aspects starting from prioritising mental health to encouraging the start-up ecosystem. One of the initiatives that we sincerely applaud is the National Education Policy, introduction to new courses & online learning. This year, we hope the new policies drive the Government’s agenda on Ease of Doing Business across the country and encouraging new startup brands. We could therefore expect some tax relaxations for start-up brands by simplifying the tax laws. This is also for lower income individuals so that they have more cash in hand if the standard deduction limit is increased," said Sneh Jain, Co-founder and Managing Director, The Baker's Dozen.

Budget 2023 Live Expectations: WHat Startups want from FM Sitharaman

"Union Budget 2023-24 is a crucial one, in supporting India’s sustainable growth. It is essential that the budget heeds to the progress of the startup ecosystem. Policy measures towards developing startup-clusters, which promote easy access to capital, incubator programs, federally funded R&D activities, among others will surely assist startups. The growth of the startup sector also depends upon clearer regulations and streamlining the process of obtaining licenses. There are certain benefits which are extended to the Inter-Ministerial Board (IMB) certified startups and not the DPIIT-recognised start-ups. The IMB certifications are difficult to get as 99% of Indian start-ups are not recognised by IMB." said Madhusudan Ekambaram, Co-Founder & CEO, KreditBee.

"Also, we hope that the government broadens the criteria for tax relief to startup employees to reduce the burden on taxation of ESOP sales. Measures towards incentivising ESOPs with simpler and appropriate tax structures would help provide startups with significant wealth creation opportunities while also helping them attract and retain talent.  Also, providing the requisite parity for capital gains tax treatment between unlisted and listed shares as investors in unlisted companies bear higher risk, will remove the complications with respect to classes of assets, tax rates and period of holding and indexation benefits. It will render the investments attractive for investors," he added.

Ahead of Lok Sabha polls, Budget 2023 to test PM Modi’s fiscal resolve 

India will unveil its Union Budget on February 1, testing Prime Minister Narendra Modi’s fiscal mettle seen as key to boosting investor sentiment even as it will likely leave less room for handouts a year before he seeks a third term.

India recently restructured the world’s biggest food program and trimmed energy subsidies to enable about Rs 1 lakh crore ($12.3 billion) in government savings. A Bloomberg survey this month of more than 20 economists showed that the majority expects the budget from the fiscal year starting April to steer clear of populist measures and focus on strengthening manufacturing and creating jobs.

Shunning wasteful expenditure is crucial for India’s robust, long-term growth as it frees up funds to build more roads and ports, enhance logistics linkages that will support Modi’s ambition to make India the new global powerhouse, without bloating the deficit capped at 6.4% of GDP in the year ending March.

Fiscal consolidation is in keeping with Modi’s first budget in 2014. He’s expected to further burnish those credentials as he becomes the first to lead what is likely now the world’s most-populous nation.

Budget 2023: What the fintech space expects from the FM Nirmala Sitharaman

Fintech in India has witnessed rapid growth in recent years, driven by a combination of factors including a large and young population, increased access to technology, and supportive government policies. Some key areas of growth in the Indian fintech industry include digital payments, digital lending, and insurance technology.

Increase spending on Digital skilling: The only way, apart from building digital infrastructure, to rapidly propel fintech growth is in terms of its human assets. 

Improved clarity in regulations: To allow robust growth of well-regulated and compliant fintechs, regulatory clarity is needed in multiple aspects. An arrangement where the regulation of non-bank fintechs is not aligned with the regulation of banks (or their subsidiaries) offering similar services will create inefficiencies and risks associated with regulatory arbitrage. 

Tax incentives: Provide tax incentives, specifically for companies establishing technology clusters in non-tier 1 cities. Tax benefits on the total expenditure incurred by fintechs involved in the financial inclusion mission are needed.