Budget Offers Relief on Income Tax and Inflation for the Public, but Insufficient Incentives for Industries

Udaipur| Union Finance Minister Nirmala Sitharaman, presenting her record eighth budget, announced several plans and changes aimed at transforming the country from a developing to a developed nation. The budget emphasized sectors like power, mining, urban development, financial sectors, regulatory reforms, and tax areas, which are welcome steps. These views were shared by senior Chartered Accountant Nirmal Singhi regarding the budget.

Singhi explained that the fiscal deficit has been reduced from 4.9% to 4.4% of GDP. He also mentioned that the TDS limit for rental income has been raised from 2.4 lakh to 6 lakh rupees, which will benefit small taxpayers, allowing them to receive their full rental income if it falls within the income tax deduction limit. Furthermore, the new income tax provisions will offer 100% tax exemptions to individuals earning up to 12 lakh rupees. However, for income exceeding 12 lakh rupees, the tax calculation will be based on 4 lakh rupees. These income tax exemptions will indirectly impact industries like FMCG, automotive, and real estate sectors. Additionally, with more money in the hands of the public, their purchasing power will increase, which is a positive step.

Singhi also highlighted that the government’s proposal to bring a new income tax bill next week, aimed at simplifying the tax process, is welcome. He also mentioned that the exemption on customs duties for raw materials used in lithium-ion battery production and the extension of basic customs duty exemptions for shipbuilding companies for the next 10 years are also positive moves.

However, despite expectations from the construction and manufacturing industries, the budget did not address key relief measures for them. Additionally, the public's hopes for a reduction in petrol and diesel prices have not been fulfilled, which is a disappointment.

Overall, the budget is a mixed one. On one hand, it offers income tax relief for the middle class, but on the other hand, the lack of announcements regarding capital assistance and subsidies for industries will slow down their growth.