Hits and Misses

A significant change in the income-tax regime, probably aimed at stopping the exodus of high-net-worth individuals from India, is lowering the level of surcharge on taxable income above Rs.5 crores, the highest bracket, from 37 per cent to 25 per cent, which will result in lowering the maximum income-tax rate from 42.74 per cent to 39 percent

- DEVENDRA SAKSENA

Even in the best of times, E budget-making is a fraught exercise. The Finance Minister has to tread a fine line balancing fiscal prudence against often contradictory demands from diverse groups ~ manufacturers, businessmen and salary earners to name a few. With General Elections due in May 2024, Union Budget 2023 was the last full budget of the present Government. As stressed by both the PM and FM, this was the first budget of 'Amrit Kaal. 'The Budget was much awaited; with the pandemic in retreat, many expected a soft, people and industry-friendly budget.

The FM listed three main goals viz.creating opportunities for citizens, particularly youth, growth and job creation, and fostering a strong and stable macro-economic environment. To achieve these objectives the FM laid down seven priorities (saptrishis) for the Budget: Inclusive development, reaching the last mile, agriculture and investment, unleashing potential, green growth, youth power, and the financial sector.

However, the most well-publicised element of Budget 2023 has been a change in the personal income-tax regime. The exemption-less tax regime introduced by Budget 2020 is now the default choice. However, a taxpayer (except one who has business income) has the choice to shift from one regime to another from year to year. The main difference between the two regimes is that Chapter VIA deductions are not available in the new regime, which has a higher floor of taxable income and lower tax rates. A rough comparison between tax payable under the two regimes is shown alongside: Thus, Budget 2023 has provided some incentive to taxpayers to shift to the new tax regime. However, it is not understood as to why there cannot be only one tax regime and what was wrong with the old tax regime, which was furthering several social objectives like healthcare, savings and insurance.