Team AckoSept 25, 2023
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Nirmala Sitharaman, the finance minister (FM), will present the Union Budget to the Parliament on February 1. From the perspective of each industry, there are a number of expectations for the budget 2023.
Let’s take a look at what different industries expect from the upcoming budget.
The Union Budget of India is the annual financial statement, presented by the government outlining the estimated revenues and expenditures for the upcoming fiscal year. It is prepared by the Union Finance Ministry, and presented by the Finance Minister to the parliament. The budget focuses on a wide range of areas, including the following.
Social welfare programs
The budget can affect the economy and various industries through changes in taxes, government spending and interest rates.
Here is a list of industry expectations for Union Budget 23-24.
Medical treatment costs have risen dramatically over time, and consumers require better health insurance coverage to have enough financial security, requiring them to pay higher premiums that exceed the present tax deduction limit. Thus, the insurance industry expects a rise in the current tax limit under Section 80D of the Income Tax Act. Additionally, a new tax section for life insurance, focus on pension plans, decrease in the GST limit (at least by 7 to 10%), tax benefits for motor insurance, are expected in the 2023-24 budget.
MSMEs anticipate an easier line of credit, which is one of their basic requirements because supply chain difficulties and late payments suffocate their operating cash. The Credit Guarantee Scheme for Micro and Small Enterprises is expected to be revamped in Budget 2023. The government might also reveal full integration of the e-Shram, Udyam, National Career Service, and ASEEM portals in the budget.
The telecom industry is requesting government assistance for infrastructure growth, such as the deployment of 5G networks and the development of internet connectivity in rural areas. It also expects tax breaks to attract investment in the sector, as well as rules that support fair competition and safeguard the interests of consumers. The Cellular Operators Association of India (COAI), a non-governmental trade association and advocacy group primarily focused on the telecoms business in India, has given several critical recommendations to the government ahead of the Budget to help boost the telecom sector.
The aviation industry is still in turmoil as a result of a major reduction in travel during the initial two years of the pandemic. With prices for jet fuel continually increasing, the aviation industry seeks financial relief to help it recover from its difficulties.
The government's commerce department expects a decrease in the tax on imported gold in the upcoming budget to increase exports and production in the jewellery industry. In July, the import duty on gold was raised to 15% from 10.75% in order to control the current account deficit and the influx of gold imports. The basic import tax on gold is 12.5%, and when combined with the 2.5% agriculture infrastructure development fee, the total import duty on gold is currently 15%.
After a significant drop in demand during the first two years of the pandemic, demand for residential properties has been growing during the past year. Realtors expect simpler and less expensive home loans for customers.
Currently, there are no regulations governing cryptocurrencies. Capital gains on crypto assets are taxable at a flat 30% rate, with no allowable deductions or set-offs. However, their trading is full of uncertainty and minimal regulation. As a result, crypto regulatory rules are expected to be introduced in Budget 2023.
Compared to the previous two fiscal years, the hospitality and tourism sectors have recovered significantly in the current fiscal year. However, they expect more clarity on GST rates in order to control rising costs.
According to Assocham (the trade association for the Aluminium industry), the basic customs taxes on vital raw materials for the aluminium industry must be reduced, and an inverted tariff structure must be corrected in the Union Budget 2023. This is because high import taxes adversely affect a sector that relies heavily on imported raw materials.
The Society of Manufacturers of Electric Vehicles (SMEV) has recommended that EV subsidies under the FAME-II plan be extended. To encourage electric mobility, the industry has also sought to include light to heavy commercial vehicles.
The National Logistics Policy (NLP) is expected to be implemented in this Budget. The NLP will alleviate bottlenecks and lower costs. India's logistics costs are approximately 14% of its GDP. To compete with other developing countries, the government should reduce logistics costs to 8-10% of GDP. The Budget is expected to focus on cost containment in the logistics industry.
The Product-Linked Incentive (PLI) program has the potential to boost India's exports while expanding them. The government may increase PLI access and expand it to prospective emerging markets in order to promote exports. Existing PLI programs are only available to corporate and large companies in specific sectors. Budget 2023 is expected to extend PLI programmes to MSMEs industry as well to enhance exports.
The annual budget for the healthcare sector must be increased by at least 20% over the previous year, i.e. INR 1 crore, which can be sub-allocated to other departments such as infrastructure, education, human resources, research, and other initiatives. To meet the 2.5% GDP target set in the National Health Policy for 2017, the stagnating level of 1.3% must grow to at least 1.5% this year.
The sector is expecting the privatisation of public sector banks (PSBs) through the Union Budget 2023-24. Experts believe that expediting the privatisation of PSBs will result in improved operational efficiency as well as increased financial inclusion in the country.
After a full year of higher cotton prices, the industry expects assistance in addressing this natural fibre's cost fluctuations. The government is expected to allot funds to achieve worldwide recognition for Indian cotton. The government may also explore a Cotton Price Stabilisation Fund Scheme, which may include a 5% interest subsidy, a drop in margin money from 25% to 5%, and an increase in credit limit from three to nine months. It would improve exports and allow for an additional 2-3% growth in the textile industry.
The electronics industry is expecting a decrease in import taxes and less GST on at least household appliances from this year's Union Budget.
Morarji Desai, a former finance minister, has presented the Union Budget 10 times, which is said to be the most by an Indian Finance Minister.
Former Indian Prime Minister Indira Gandhi had presented the Union Budget in 1970.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet, and is subject to changes.
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