As we enter 2023, all eyes will be on the impending Budget 2023, delivered on February 1 by Union Finance Minister Nirmala Sitharaman. The Budget is expected to provide tax breaks to taxpayers, particularly salaried and professional workers. However, many analysts anticipate that there will be no major announcements in the Budget.
“Budget 2023 will be a critical budget for the Government. The Government will propose the final comprehensive Budget before the 2024 elections. The emphasis would be on expenditure in this Budget. Thus we cannot expect any significant respite from the Government,” says Ankit Jain, Partner at Ved Jain & Associates.
However, there are still some Budget expectations for working professionals. Here is a list of such expectations:
Taxation by assumption
In Budget 2016, the Government implemented a model of presumptive taxation in which only half of a professional’s receipts were taxed as income. This plan was only open to professionals with a yearly salary of up to Rs 50 lakhs. According to Ankit, the Government may raise the cap from Rs. 50 lakh to Rs. 75 lakh or Rs. 1 crore.
According to Jyotika Jain, Partner at MVAC, professionals across the spectrum would anticipate clarification on the execution of Section 194-R rules in the aftermath of the Supreme Court’s ruling in Mahindra & Mahindra Ltd.
“The Government must make it sufficiently apparent that write-off of debt is not a benefit or perquisite resulting from the exercise of the profession, and consequently be maintained outside of the jurisdiction of TDS under Section 194-R. Naturally, given the practical obstacles, a lead time of up to a few months is required, and the provision’s effective date is postponed accordingly,” adds Jyotika.
Tax slab change
The tax slabs have also remained relatively the same since 2014. While the basic exemption threshold was increased to Rs 5 lakhs, the highest tax rate applies for income from Rs 10 lakhs.
“We hope the Government can increase the slab rate from the current Rs 10 lakhs to Rs. 20 lakhs. A similar change can be made for the slabs as per the new regime, with the highest slab pushed to Rs. 30 lakhs from the current Rs. Fifteen lakhs,” says Ankit.
“With the country out of the grip of COVID and the forecast for the economy looking robust, now would be a good moment to offer these advantages to the Indian people so that there is more money in the hands of the people, which would lead to domestic consumption,” he says.
Basic Exemption Limit Increase
According to Jyotika, the primary expectation that would affect not only professionals but everyone in general would be a rise in the basic exemption level from the existing Rs 2.5 lakh. Given that people with income up to Rs 5 lakh are eligible for a refund under Section 87A, it is only natural to increase the exemption level to at least Rs 5 lakhs, simplifying the essential step in income tax calculation.