Budget 2023: Since the Union Budget 2023 will be the last full-term budget to be presented before the 2024 Lok Sabha elections, there are high expectations that Finance Minister Nirmala Sitharaman will tweak tax rates for Indian taxpayers. Besides, major decisions regarding long-term capital gains (LTCG) tax on equity investments and measures to boost demand in the housing sector are anticipated.
Will the income tax brackets be changed by Finance Minister Nirmala Sitharaman?
Individuals currently pay no tax on income up to Rs 2.5 lakh and 5% on income between Rs 2,50,000 and Rs 5,00,000. 20% tax is paid for income between Rs. 408212.50 and Rs. 816,425, and 30% for income over $10,000.
According to experts, Sitharaman may increase the threshold limit from Rs 10 lakh to Rs 20 lakh for people falling in the 30 per cent tax bracket. Under the Concessional Tax Regime (CTR), which was introduced in Budget 2020, it is also possible that the government may revise the slab rates. It is being speculated that the lowest tax rate may be set at 7.5% instead of the current 5%, with income up to Rs 5 lakh being tax-free.
On LTCG, what will FM Nirmala Sitharaman do?
According to experts and analysts, the Long Term Capital Gains (LTCG) tax is likely to be rationalized in 2023-2024. Shares held for more than a year are currently subject to 10% taxation. LTCG tax was abolished in 2005, but the BJP government restored it in 2018.
Sustaining the pace of direct tax growth may be difficult:
It may be difficult for the government to maintain the pace of direct tax growth in the coming financial year. Between April 2022 and January 10, 2023, India’s direct tax collections grew 19.5% year-on-year to Rs 12.31 trillion (Rs 151.70 billion).
The real estate industry has requested for tax and policy relaxations in the Union Budget 2023-2024 to sustain the demand in the housing and real estate industries. The real estate industry expects the government to offer incentives to sustain housing demand which was badly hit by COVID-19 in the light of rising interest rates.
Insurance companies expect tax exemption:
Indian insurance companies expect more tax exemptions for their policyholders. As per reports, the decision-makers at the insurance company want to eliminate or reduce the Goods and Services Tax (GST) on insurance premiums, tax-exempt pension and annuity income, and set up a separate category for tax deduction for premiums. Huh.
questions to ask
Q1. What is LTCG?
Long-term capital gains, or LTCG, are returns on investments that last over a long period of time.
Q2. What if LTCG is more than one lakh?
Any LTCG (on equity) above INR 1 lakh will be taxed at 10% (plus surcharge and cess)