Thursday, May 23, 2024
HomeOpinionsMajor Tax reforms in Budget 2023?

Major Tax reforms in Budget 2023?

Also Read

The preparation of the budget for the Fiscal Year 2023-24 is in full swing, and it would be presented in the parliament on 1 February, 2023. As this budget is nearing to 2024, the current government before the country goes to polls in 2024, significant changes are expected to provide some financial relief to citizens and taxpayers.

According to Finance Minister Nirmala Sitharaman, the next budget will be ‘carefully structured’ to sustain growth and contain inflation. Combating high energy prices in the near future also remains a key challenge for the government. Through this article, let’s discuss some expected changes in the Tax Structure which could be implemented in Budget 2023.

Changes in Capital Tax Structure

At present equity investments for more than 1 year are regarded as Long-term, and gains of more than Rs 100,000 are taxed at 10%. Equity investments for less than a year are regarded as Short-term and currently taxed at 15%. Investments in debt funds are considered long term after a duration of 3 years while investments in immovable properties are considered long term after 2 years, and long term capital gains from these investments are taxed at 20%.

To simplify this disparity of tax rates and holding periods among various asset classes, it is expected that a simplified Capital Gains Tax structure could replace the current structure, making investments in debt funds and real estate more lucrative.

Change in Tax Slabs: Relief for individual taxpayers

Some changes in Tax Slabs are expected which would provide relief to the middle class individual taxpayers. Last year taxpayers paying tax as per Old Tax regime (with tax rates 5%,20% and 30% plus surcharges) were provided with an alternative New Tax regime (with tax rates 5%,10%,15%,20%,25% and 30% plus surcharges) to choose a scheme which is more beneficial to them. In this regard, increasing the lower tax slabs could have a more significant impact on the Income Tax calculations of middle class individual taxpayers.

Implementation of Stakeholder recommendations

The Finance Ministry invited suggestions for changes in tax rates and structure for Direct as well as Indirect Tax from industry stakeholders and trade associations. “The industry also needs to submit the justification for their demand which, if found with merit, could become part of the Union Budget for 2023-24 (April-March), to be tabled in Parliament on February 1, 2023,” the ministry said in an official statement. The purpose of inviting these suggestions is to simplify tax structure, reduce compliance burden and litigation and improve the inverted duty structure in Direct tax. The deadline for sending these changes to the Finance Ministry was November 5, 2022.

In my opinion, implementing these changes will provide some relief to citizens who are already facing inflation and incentivize people to invest in the real estate sector as part of their investment portfolio.  Overall, the budget will help our economy to maintain its status as the fastest growing major economy of the world and simplified taxes would increase investments by Foreign Institutional Investors and help achieve the Indian government’s target to make India a developed nation by 2047 and increase the GDP from $3 trillion to $20 trillion.

  Support Us  

OpIndia is not rich like the mainstream media. Even a small contribution by you will help us keep running. Consider making a voluntary payment.

Trending now

- Advertisement -

Latest News

Recently Popular