Is Union Budget 2023-24 going to give the required boost to the economy?
Since next year, 2024 is going to be the year of the Lok sabha elections, so, the 2023-24 Union Budget which is to be presented on the 1st of February 2023, has a lot of expectations attached to it. As per experts, this budget is going to focus on the manufacturing industry, rural economy, infrastructure and capital expenditure. Our previous article on Budget expectation was for the common man, and now we will be focusing on the macro level expectations. Let’s see what the economy as a whole is expecting from this budget too.
#1 Manufacturing Units expecting more incentives
Union Budget 2023-24 is expected to have two provisions which are crucial for the manufacturing industry. Firstly, it should have tax incentives on operational costs for expansions or capital expenditure, for using innovative technologies such as artificial intelligence, the Internet of Things and machine learning and for optimal utilization of capacity.
The next provision should be fewer interest charges for paying GST payments after due dates. The current interest rate on late GST payments is 18% and the manufacturing industry is expecting this rate to be down to 12%. This is a suggestion that came from the Associated Chambers of Commerce and Industry of India. They have suggested this keeping in mind the long-term benefits.
#2 Tax incentives for Solar Energy
There is a 2023 solar mission target which has been set by the government and even though there have been multiple advantages to using solar energy, we are still not there. One of the main reasons for not achieving the required momentum is the non-availability of any exemptions especially tax exemptions for using solar energy or renewable energy for that matter. In this upcoming budget, it is expected that the government will introduce some kind of tax exemption for boosting the usage of solar and other forms of renewable energy.
#3 Corporates are looking forward to some reduction in the corporate taxes
While the corporate tax has already been lowered from the earlier rate of 30% to 25% to boost the industries, but still corporates are looking forward to a 15% corporate tax. While this seems a little distant dream but if this comes into effect, then India is going to be one of the most competitive economies for business and investments. It will not only help the industries to thrive but also give the necessary boost to the service sector and generate more employment, as suggested by experts.
#4 Enforcement of New labour laws
There are more than 50 crores of workers in the country and out of them, 90% are working in the unorganised sector. Thus, the majority of the workers are unable to enjoy the benefits of labour laws. This is why the government came up with unified labour codes. There are four of them which are the code on wages, social security code, industrial relations code and occupational safety, health, and working conditions code. Though these codes were approved in 2020, hardly a few of the state governments imply these codes. Thus, in this budget, it is expected that the government will come up with simpler enforcement ideas to implement these codes to benefit all workers.
#5 Changes in Capital Gain Taxes
With the widespread rise in IPOs and people investing in the stock markets and becoming aware of alternative investments, there is an increase in the expectation from the government to streamline the capital gain taxes as well.
#6 Changes in the National Pension System
National Pension System is one of the most popular investment vehicles, especially those who are looking for lower-risk investments for planning their retirements. Now, employers who contribute to the NPS for their employees, get a deduction in the taxes up to 10% of the salary of the employee for which the contribution is being made. On the other hand, the central government has increased and made it mandatory for employers to contribute 14% to the NPS and thus, the corporates are expecting the tax exemption to rise as well to align with the 14% contribution mandate.
#7 Schemes like PMAY to boost housing in rural India
While PMAY has been a great success, but still there is a long way to go. Housing for all is still one of the top priorities of the government and thus, it can be expected that this budget will come up with other incentives to promote housing in the rural area where the income level is lowest.
Union Budget of 2023-24 is expected to be one of the better budgets in the last ten years of the Modi government and help the economy to grow with the required boost.
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