With every New year comes new expectations from a billion people for a better life. With the long-standing dreams always being lower tax rates for everyone. Even this year is no different as public see COVID wrapping up its journey and leaving economy in turmoil.
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Sahen Karamchandani, Founder of WealthinIndia.com discusses a few pre-budget expectations for the fiscal year 2023-24:
Higher Purchasing power for common man
Increase in Basic Taxation Limit: The basic exemption limit for lower end taxpayers has not been revised for a decade now. The Government has increased the rebate amount up to Rs 5 lakh in the recent budget but decided to leave the Basic Structure unchanged, raising lot of completabilities. A change of Basic Structure would be welcomed by open hands by the public with High inflation in the country, leaving higher disposable income in the hands of the common man.
Increase in 80c Exemption Limit: Even the 80c allowance has been a decade old now, a increase in the limit to Rs 2 lakh p.a from Rs 1.5 lakh p.a would further help boost investment into PPF, ELSS and Insurance.
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Incentivise HNI’s to file tax
Despite Demonization, India is still running with a parallel economy of unregulated money. This can only be reduced by making income filing more lucrative for the wealthy. The highest tax rate of 30 percent needs to be slimmed to 25 percent to provide some tax relief and incentive.
Globally competitive corporate tax structure
The Indian corporate world is currently complexed with different tax rates for every sector. To position India as a competitive hub globally a flat tax rate of 15 percent could do the trick. Uniformity of tax rate will also make a strong step toward of ease of business in India, boosting manufacturing and service sector.
Overall, the main agenda of the government in this Budget is expected to be widening of the taxpayer base instead of tightening of rules and penalties. We as a nation hold very low taxpayer base and government must hold no stone unturned to shift the change. Opportunities like amnesty must be continued with a further incentive structure to roll in the black money into the economy. The goal is to encourage potential tax paying candidates to file income, a change which might be slightly tough to initiate. To sum it up initiatives such as flat corporate tax rate, Lower tax structure and higher exemption limit might help India to widen the taxpayer ecosystem for future.
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