With a little less than a month left to go before the announcement of the next Union Budget, Indian businessmen and women, salaried employees and farmers at large have their eyes on the Government for their next action. While in the annual meetings with IMF in the US- Nirmala Sitharaman had given us a clue about the Budget having an inclusion of growth priorities for those filing taxes in India this year. Due to the fact that it is the final complete budget before the general elections next year, the markets, especially filing and tax experts are generally enthusiastic about the Budget. Going forward, it will be vital to take actions to improve internal sources of growth as well as look into new markets and export potential for many companies.
In this article you will explore the various angles explored by the government before deciding on the upcoming Union Budget. A glimpse of what can be expected will be showcased below. But before that, lets take a look at the estimated spends and savings per cent of GDP for next 2 years, released by the Ministry of Finance.
Private Sector
One can expect a spur in the private sector investments. Private sector investments, have been stagnant for a while, that need to see a spur in growth. Government support in this area is highly important. The overall investment rate now hovers around 30% of GDP, but this too is expected to increase for 2023.
It is also anticipated that, tax breaks may be provided. If so, they will have a favorable effect on consumer spending, causing demand across all industries to substantially increase. Given the difficulties associated with energy volatility, the downturn in the global economy, and the concerns over an impending recession in the US and Europe, it will thus be intriguing to see what the government has to offer. Let’s cross our fingers and watch how Union Budget 2023 turns out to be
Technology Sector
With the coming of the Union Budget 2023–24 on February 1, India is expected to gain even more attractiveness as an ideal country for investments in the current geopolitically unpredictable times.
A big part of attaining this goal will probably be the growth of the information technology sector. According to a recent forecast, expenditure on information technology in India is anticipated to rise by 2.6% in 2023, mostly due to a significant 13.7% growth in software spending. This is a massive number and with the scale in which we are growing, businesses will benefit largely with the upcoming reliefs and clauses to be introduced in Union Budget 2023.
GST Compliance Simplification
Since information is now freely available to tax authorities owing to improvements in digitalization, the government may eventually do away with the requirement to withhold taxes from merchant payments.
In order to give relief, some portions of the tax audit report is expected to be eliminated. The recently implemented GST provision has greatly increased the workload for both the auditor and the taxpayer due to the demand for considerable information, that is difficult to pull from ERP systems of major Indian taxpayers. Those investing in equity can read more on how to invest smartly in equity as an Indian taxpayer.
Clarity on International Tax
Lower margins should be required, and assessees with turnover beyond the current limit of Rs 200 crore should be granted safe harbours for transfer pricing. These changes are expected in Union Budget 2023 and would help decrease several tax disputes by promoting the acceptance of safe harbour.
Non-residents will not be required to file tax returns in India if the only income derived from India consists of specific dividends, interest, royalties, or fees for technical services, and taxes are regulated at domestic tax law rates. It must be made clear in what situations transfer pricing compliance is not required, when speaking of international taxation.
IT Return
Simplification in filing IT returns is expected after Union budget 2023. People who are paid a salary won’t need to go through paperwork with their employers and keep records in case of future investigation.
As a tax filing expert, we believe non-residents have profited more from the new system since they do not often claim major deductions and exemptions. Because no deductions are permitted for items like home rent allowance, leave travel allowance, standard deduction, Section 80C, and Section 80D, a salaried person would not benefit from choosing the new system. If a salaried individual takes exclusively the Section 80C deduction, the new system is appealing when the taxable income surpasses Rs 8.5 lakh, when comparing the two regimes.
The Conclusion
All in all, several industries within the country are hoping for a betterment of their future. While salaried class is hoping for better relief on Income Tax, business owners and large tax-payers of corporations expect relief on exports, duties and introduction of ease in expenditures by the introduction of new technologies and infrastructure growth.