Five major announcement expectations from Budget 2023

31 Jan 2023|

2 min read |

by ICICI Securities Team

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.

Disclaimer

ICICI Securities Limited has its registered office at ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. The non-broking products / services like iLearn and Financial Learning are not exchange traded products / services and ICICI Securities Ltd. is just acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. iLearn is not an exchange traded product/service of ICICI Securities Ltd. All disputes with respect to the activity on the platform would not have access to Exchange investor redressal or Arbitration mechanism.

ICICI Securities Ltd. is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. ICICI Securities Ltd. is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990. Name of the Compliance officer (broking): Mr. Atul Agrawal, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. ICICI Securities Ltd. and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory. AMFI Regn. No.: ARN-0845. PFRDA registration numbers: POP no -05092018. ICICI Securities Ltd. acts as a Composite Corporate agent having registration number -CA0113. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund, Corporate Fixed Deposits, Bonds, Alternate investment funds, Tax planning, Succession planning, NPS, IPO, Investment Advisory and Loans related services are not Exchange traded products and ICICI Securities Ltd. is acting as a distributor to solicit these products. Please note, Insurance related services are not Exchange traded products and ICICI Securities Ltd. is acting as a corporate agent to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The non-broking products / services like Research, etc. are not exchange traded products / services and all disputes with respect to such activities would not have access to Exchange investor redressal or Arbitration mechanism. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.