Middle class, employed people can get some relief on income tax front in the budget: Sudipto Mandal

New Delhi. The government may give some relief on the income tax front to the middle class and employed people in the budget to be presented before the 2024 Lok Sabha elections. Apart from this, the scope of areas covered under the Production Linked Incentive (PLI) scheme is also likely to be increased. Renowned economist and chairman of research institute Center for Development Studies Sudipto Mandal has expressed this possibility. Finance Minister Nirmala Sitharaman will present the budget for 2023-24 in Parliament on February 1. This is his last full budget before the Lok Sabha elections next year. When asked about the government’s priorities in the budget in view of the current global challenges and the domestic situation, Mandal said, “Definitely many global problems have come together and this has increased the economic challenges on the economy front in the country.”

These include slowing of economic growth, rising inflation and current account deficit along with insufficient employment generation. Inflation, especially core inflation (excluding fuel and food articles), continues to remain elevated. The rate of economic growth has slowed down in the first three quarters of the financial year 2022-23 and we estimate that the GDP (Gross Domestic Product) growth rate in the financial year 2023-24 will be only 5.2 percent. Besides, the current account deficit (CAD) is also above a satisfactory level. In view of all these things, I believe that the Reserve Bank will continue its efforts to bring inflation under control, while special attention should be paid to economic growth, especially employment-enhancing growth and measures to promote exports in the budget.

According to RBI data, the current account deficit widened to $36.4 billion, or 4.4 per cent of GDP, in the second quarter of the current fiscal from $18.2 billion, or 2.2 per cent of GDP, in the first quarter April-June. CAD is mainly the difference between the total export and import value of goods and services. However, it also includes net income and (interest and dividends etc.) and transfers from abroad (foreign aid etc.), but their share is much smaller. Asked about the expectation of some relief in the budget for the middle class and salaried people on the income tax front, Mandal said, “Actually, a large section of salaried people do not pay income tax. Only the upper middle class and a small section of the wealthy pay income tax. Therefore, any change in the provisions of personal income tax will not affect a large section.

Also, our personal income tax rates are not very high by global standards. Our tax structure needs stability rather than change. So I think no significant changes are expected in the income tax structure. From the point of view of taxpayers, simplification of income tax provisions through the Direct Taxes Code would be more important. It is better to simplify tax payment procedures and compliance requirements. He said, “However, it is quite possible that the Finance Minister will announce some relief by increasing the exemption limit (tax slab and investment limit) or standard deduction.” In response to another question, the economist said, The realty sector has just started coming back on track after a long period. Also, it is an employment enhancing sector. In such a situation, if the limit of exemption on interest payment on housing loan is increased, then it will be a welcome step.

Asked about the Production Linked Incentive (PLI) scheme, he said, “The PLI scheme has boosted production in some areas. But its benefits went mainly to large enterprises in the organized sector. I hope this scheme can be extended to more employment generating sectors. It would be better to implement the scheme for those sectors which export a major part of their production. This will help in promoting production in export-oriented areas.” It is noteworthy that the Finance Minister has announced a production-based incentive scheme for 14 major sectors with the intention of boosting manufacturing and creating employment in the country. This scheme has been implemented in areas like vehicles, vehicle components, advanced chemical batteries, special steel.

On agriculture, Mandal said, “In the agriculture sector, crop diversification is essential. Our main challenge is to replace water-intensive crops like rice, wheat and sugarcane with other crops. The recent attention paid to millets is welcome. If the budget announces changes in the food policy system, procurement and public distribution system for crops like millets, pulses and oilseeds, then it will be a good step. Important provisions are expected to be made for this in the expenditure budget.

Disclaimer:IndiaTheNews has not edited this news. This news has been published from PTI-language feed.

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