Budget architects confident of meeting 10% growth in tax revenue next year

The Budget document aims for a 10.5 percent growth in tax revenue next year and Malhotra is confident that this target will be met, said Revenue Secretary Sanjay Malhotra. He added that the government has seen good revenue growth from both direct and indirect taxes, with gross collections growing by over 24 percent this year.

Finance Minister Nirmala Sitharaman on Wednesday said the government has made the new income tax regime more attractive for taxpayers and has thus brought about 'substantial changes' in its structure for the benefit of the middle class.

The Budget 2023-24 has proposed changes in the optional tax regime, which was introduced in 2020-21. As per the changes proposed in the Budget, no tax would be levied on people with annual income of up to Rs 7 lakh under the new tax regime but it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.

Malhotra said majority of individual taxpayers would find it more attractive to shift to the new regime.

“In the personal income tax regime, while we have not tinkered with the old scheme, whatever benefits are to be given have been linked only to the new tax regime. So, one is rebate, an increased rebate of Rs 7 lakh which becomes equivalent to Rs 5 lakh plus Rs 2 lakh investment in the old tax regime, slabs with lesser taxation starting from Rs 3 lakh vis-a-vis be Rs 2.5 lakh in the old scheme," Malhotra told CNBC-TV18.

Chief Economic Advisor, V Anantha Nageswaran believes that the new tax regime will be especially beneficial for the younger generation, who don't have historic exemptions to worry about and will automatically choose the new regime.

Speaking to CNBC-TV18, Nageswaran said, “What it does to consumption naturally, the entire thrust of the tax package announced in the Budget today is about putting more money in the hands of people, whether it is retired people, old age, elderly people, senior citizens or the youngsters. So I think on the margin, it is going to be positive for consumption.”

The new base for GST collections has been set at an average of Rs 1.5 lakh crore per month, and Malhotra hopes that this growth will continue as the economy grows.

He also spoke about the Budget allocation for MNREGA, which had a lower allocation in Budget 2022, but as demand came in, it was added accordingly.

The allocation under MNREGA has been set keeping job creation through other schemes in mind, and if the job demand under MNREGA goes higher, it will be met.