Budget 2023: Income tax changes for middle class

One of the major highlights of Budget 2023-24 is the announcement of direct and substantial relief to personal income after a long time. Relief was also offered in corporate tax, but the focus of the debate was on income tax exemption. After presenting the budget, Finance Minister Nirmala Sitharaman and her team spoke to reporters on various issues including tax changes, inflation, capital expenditure. Highlights:

What do you have to say about the budget?
Finance Minister: I think it is a very balanced budget. Growth concerns are fully addressed through capital investment. We have given emphasis on public investment and fully cater to MSMEs. We have also given them tax breaks and an opportunity to raise more capital than before. The middle class also needed some tax relief, which was fully addressed in the budget. Despite this, the treasury and fiscal deficit were not neglected.

You gave income tax relief but kept it under the new personal income tax regime. Why so?
Finance Minister: We want to make the new tax regime more attractive to people without exemptions. But if people still prefer the old system i.e. tax free system, they can continue with it. But our aim is to make the new system attractive.

Revenue Secretary: Earlier announced no exemption system for corporate tax and today more than 60 percent companies have adopted it. We cannot give the figures for the new personal income tax regime, but we hope that most taxpayers will accept it.

Inflation is a major problem for your government…
Finance Minister: Wholesale and retail price inflation is coming down. This is happening because of the steps taken by the government and the Reserve Bank of India. When inflation rises, we start ignoring it. We tried everything possible to control it in all seriousness.

Government pushing for capital expenditure but its revised estimates low?
Finance Secretary: The revised estimate for the current financial year is low and is only 97 percent of the budget estimate. The reason for this is to help states with capital expenditure. The cost of the center will be higher than the budget estimate. Some states have not yet met the prerequisites for availing this expenditure.

What is your take on the review by financial regulators?
Economic Secretary: Certain provisions have been brought in for specific purposes. Then economic conditions changed and regulators began to act on their own. But we must now evaluate which laws are actually necessary for the economy.

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Explain the government’s debt target.
Finance Secretary: Borrowing has increased by 8 percent over last year. The economy grew at a nominal rate of 15 percent during this period. Borrowing this much, the private sector has no qualms and cannot back down. Also, it will not increase the cost of borrowing for the private sector.

What is the background behind the Banking Act Amendment?
Economic Secretary: This exercise is undertaken to improve the functioning of the board of directors of these banks and protect the interests of investors. This should not be linked with privatization of public sector banks.