Five major announcement expectations from Budget 2023

As the Finance Minister, Nirmala Sitharaman is all set to present the Union Budget in the coming days, every citizen’s expectations are set high. With the Budget announcement, citizens hope for some tax relief and look to benefit from various infrastructure and social welfare projects.

The Union Budget 2023, which is the government’s statement of account for the coming fiscal as well as the ongoing fiscal, will be announced on February 1.

This is the last full budget to be presented in the tenure of the current government, ahead of the 2024 elections.

Like every year the Budget announcement is surrounded by a lot of buzz and discussion. The article offers a quick overview of the 5 major Union Budget announcements expectations to watch out for.

Lower fiscal deficit

Analysts expect the government to reduce its fiscal deficit from 6.4% projected for the current year to 5.9% for the upcoming fiscal. Fiscal deficit is the difference between the government’s revenue and expenditure for a financial year.

Changes in tax rates and slabs

Taxpayers have been clamouring for relief for income taxpayers. Income tax slabs have remained unchanged since 2014-2015. At present, the basic tax exemption limit is Rs 2.5 lakhs. With the Union Budget 2023 around the corner, taxpayers expect the basic exemption limit to be increased to Rs 5 lakhs.

Similarly, citizens belonging to the senior (over 60 years of age) and super senior (over 80 years of age) categories will also expect additional relief in the form of a hike in the minimum exemption limit.

Increase in the non-taxable limit on Equity LTCG

In 2018, the government announced the applicability of Long-Term Capital Gains (LTCG) on Equity returns. However, returns up to Rs 1 lakh were tax-exempt. With the upcoming Union Budget announcement, investors expect the tax exemption limit to be raised to Rs 2 lakh.

Besides Long-Term Capital Gains, Securities Transaction Tax (STT) also apply to Equity transactions. With the Budget announcement, investors hope for the withdrawal of STT. However, the withdrawal seems very unlikely.

Enhancement of the Home Loan deduction limit

Homebuyers expect some good news with the Union Budget 2023 announcement. Presently, under Section 24b homebuyers can claim a tax deduction of up to Rs 2 lakhs on annual interest payments. With the Budget announcement, real estate companies have called upon the government to consider enhancing the tax deduction limit to Rs 3.5 lakh.

Homebuyers can also claim a deduction for the principal amount paid on a housing loan of up to Rs 1.5 lakhs under Section 80C. However, to claim this deduction, the house property should not be sold within five years of possession.

Focus on key sectors to continue

Over the past many years, the government has maintained a strong focus on capital expenditure spends like infrastructure.

In this Budget as well, experts expect that focus to continue given that in 2021, the government announced an ambitious plan to spend Rs 100 lakh crore on the sector under the Gati Shakti project.

The industry expects the government to provide more incentives to promote manufacturing in India. The defence forces would also expect the finance minister to continue to allocate a fair chunk of money, as it has done over the past several years.