The Union Budget presentation for 2023–24 is just around the corner. Reductions in income tax rates and other forms of relief are anticipated by taxpayers. However, relief may not be provided to taxpayers. The government may attempt to simplify the structure, but individual taxpayers’ and businesses’ tax burdens may continue to rise.
“Spending is unlikely to slow down, in part because of the political pressures of a pre-election year, in part to offset a cooling export market, and in part to compete with other emerging markets to lure manufacturing away from China.
This would imply that there will be no relief for taxpayers. “Professor Vatsalya Srivastava, assistant professor of economics at the Jindal School of Government and Public Policy, told DNA that there may be attempts to simplify the structure, but the tax burden on individuals and businesses is not likely to come down,” she said.
Numerous factors, including the threat of supply disruptions, the conflict in Ukraine, the Covid-19 surge in China, and the slowing of demand in advanced economies, make the year ahead uncertain. The government will work to improve its fiscal health.
“The conflict in Ukraine’s threat of supply disruptions has not diminished. The rural economy may suffer severely as a result of the squeeze on supplies of essential goods, including vital ones like fertilizers.
This, in addition to the recent increase in cases of covivirus in China and the slowing of demand in advanced economies, makes the year ahead uncertain. The government will need to strengthen its fiscal health, especially with little to no room for maneuver on the monetary policy front,” Srivastava stated.
Older people who put their money in savings accounts might feel better. The differences between saving instruments are one area where there might be some room for improvement.
A tax system that explicitly favors debt or more conventional instruments like fixed deposits may need to be rethought in uncertain times as savers shift away from equity markets. This may alleviate some pressure, particularly for older savers,” he added.
In anticipation of the General Elections in 2024, it is possible that the government will offer some form of assistance to members of the middle class, individuals with employed incomes who pay taxes, government employees, and small and medium-sized business owners. A significant GST announcement is also getting a lot of attention.
In the meantime, the Finance Ministry is already working on developing a common income tax return form that is easy to use for all taxpayers. When Union Finance Minister Nirmala Sitharaman presents the Union Budget 2023 on February 1, she is anticipated to make a statement regarding this.
