The Union Budget 2023-24 presentation is around the corner. Taxpayers are expecting relief including reduction and income tax rates. However, taxpayers may not get any relief. While the government may attempt to simplify the structure, the tax burden on individual taxpayers and businesses may not reduce.
“Spending is unlikely to slow down, partly due to political pressures of a pre-election year, partly to offset a cooling export market and partly to compete with other emerging markets to attract manufacturing away from China. This would imply that taxpayers should not expect any relief. There may be attempts to simplify the structure, but the tax burden on individuals and firms is not likely to come down,” Prof. Vatsalya Srivastava, assistant professor of economics at the Jindal School of Government and Public Policy, told DNA.
The year ahead looks uncertain owing to multiple factors including threat of supply disruptions, Ukraine conflict, Covid-19 surge in China and slowing of demand in advanced economies The government will look to shore up its fiscal health.
“The threat of supply disruptions from the conflict in Ukraine has not abated. The consequent squeeze on supplies of essential products, including critical ones, like fertilisers, can have serious consequences for the rural economy. Along with the recent surge in covid cases in China and the slowing of demand in advanced economies, this makes for an uncertain year ahead. Especially with little to no room to manoeuvre on the monetary policy front, the government will have to shore up its fiscal health,” Srivastava said.
Older individuals who put their money in savings instruments may get some relief. “One area in which there may be some reconsideration is the difference across saving instruments. In uncertain times, as savers may move away from equity markets and towards debt or more traditional instruments like fixed deposits, a tax structure that explicitly favours the former may have to be re-jigged. This may provide some relief to especially older savers,” he added.
With the General Elections to be held in 2024, there is expectation that the government may give some kind of relief to the middle class, employed income tax payers and government employees along with small and medium businessmen. There is also buzz around a big announcement on the GST front.
Meanwhile, a user-friendly common income tax return form for all taxpayers is already in the works at the Finance Ministry. Union Finance Minister Nirmala Sitharaman is expected to make an announcement regarding this when she presents the Union Budget 2023 on Wednesday, February 1.
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