Budget 2023 Expectations: Lifestyle Has Become Costlier, Will The Wait On Tax Slab End, Hope For Relief On 80C

Budget 2023 Expectations

Economist Demand in Budget 2023: The general budget of the country is going to be presented on 1 February. Apart from the common man, the market and the industry, the budget is also being watched. After suffering from Corona for 2 years, this time it is expected that the government can make some big announcements to boost the economy. In such a situation, economists also have some demand from Finance Minister Nirmala Sitharaman. Before the general budget, economists say that in view of the increase in inflation and cost of living, there is a need to increase the exemption limit under the Income Tax Act along with tax slabs and standard deduction.

4 Tax Slabs Instead Of 7

Economists also said that the middle class will get the biggest relief only when inflation comes down. For this, the government will have to take measures. Economic experts have demanded to simplify the non-exempt income tax structure and reduce it from the existing 7 slabs to 4 slabs. Finance Minister Nirmala Sitharaman will present the budget for 2023-24 on February 1. This is the last full budget of this government before the general elections next year.

Expected change in tax slab

Economist and currently Vice-Chancellor of Dr. BR Ambedkar School of Economics University, Bangalore, NR Bhanumurthy told the news agency that it is difficult to assess what will happen to the middle class in the budget. However, any measure to bring down inflation to the level of 4 per cent would be a welcome step. As far as tax slabs and standard deduction are concerned, relief should be given considering the increase in the cost of living.

Exemption Limit Increased Under 80C

Professor Lekha Chakraborty at the National Institute of Public Finance and Policy, an economic research institute, said that income tax rates and tax slab revision is a complex matter. However, under Section 80C of the Income Tax Act, the investment limit can be increased from the existing Rs 1.5 lakh. This will encourage savings. However, for this, the Reserve Bank will have to solve the problem of negative interest rate.

Less Hope For Big Relief To Tax Payers

Professor Sudipto Mandal, chairman of the Center for Development Studies, says that no major relief is expected in the case of tax-paying salaried or middle-income groups. However, as a relief, there may be some increase in the standard deduction limit. Currently, there is a rebate of up to Rs 50,000 under the standard deduction. Mandal said that there should be only 4 tax slabs, this will make things easier.

Alternative Income Tax Regime

The government had introduced the alternative income tax system in the budget of 2020-21. However, other tax exemptions like rent allowance, home loan interest and investment under 80C are not given in this arrangement. Where there are 4 slabs in the old tax system, there are 7 slabs in the alternative income tax system.

Blueprint To Deal With Inflation

Lekha Chakraborty, who is also a member of the Governing Board of the International Institute of Public Finance (IIPF), Munich, said that rising inflation is an important factor affecting the middle class and the poor. Given the limitations of the RBI in tackling inflation, there is a need to support people through employment guarantees and food security, along with strengthening investments in education and health through fiscal policy.

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