On February 1, Union Budget 2023–24 will be presented by Union Finance Minister Nirmala Sitharaman. The government is expected to put its attention on improving the nation's infrastructure while also announcing tax benefits for the general public.
Everyone is watching to see how the government manages the fiscal imbalance and inflation. The budget deficit is likely to rise if the government spends more on capital and revenue expenditures than planned. Higher market borrowing by the government might come from this, which would put pressure on interest rates and cause inflation.
Infrastructure and Social Scheme Spending
This year's budget is also expected to include greater investment in infrastructure. Large infrastructure initiatives are projected to start in the upcoming years as a result. Since this budget will be adopted before the general elections in 2024, it is expected that more money would be set aside for infrastructure improvements and welfare systems.
Reduce Fiscal Deposit
According to the Goldman Sachs Group, India may reduce its fiscal deficit target for the upcoming fiscal year beginning on April 1, 2023, by 50 basis points. In a paper, Goldman economists Andrew Tilton and Santanu Sengupta predicted that India would keep its deficit to 5.9% of its GDP in the upcoming fiscal year.
The central government will raise welfare expenditures while preserving capital investment, according to economists. The economists stated that "rural employment and housing are likely to be in focus."
Tax Slab
The basic exemption threshold for individual taxpayers under the current tax bracket is 2.5 lakh rupees, and it hasn't changed since 2014–15. It implies that anyone whose income is below this threshold is exempt from filing income tax returns. In the forthcoming budget, the income tax exemption threshold is now expected to increase to 5 lacks.
Standard Deduction
Additionally, the taxpayers expect that the government would likely increase the standard deduction from 50,000 to 1 lakh rupees. The standard deduction cap should be increased, say, experts, to reflect rising inflation and rising living expenses.
Improved Home Loan Deduction Limit
According to section 24(b) of the Income Tax Act, taxpayers may deduct interest paid on home loans. However, this deduction is only allowed for up to 2 lacs per year. The deduction cap is probably going to be raised in light of the recent rise in house prices.
