Tax cuts, factory incentives: Here's what to watch for in upcoming Budget

Income Tax

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Jan 31, 2023

India’s budget on Wednesday will test the government’s resolve to stay fiscally prudent as expectations of lower taxes, wider social security net and further boost to production gather steam before national elections.
Finance Minister Nirmala Sitharaman may tweak income-tax slabs to provide relief to the nation’s vast middle class and increase spend on the poor through programs such as rural jobs, while ramping up financial incentives for local manufacturing, according to economists and reports in local media.

Social welfare programs would get “appropriate” allocation as “the gap between have and have nots has widened,” said India Ratings & Research Pvt. economist Devendra Kumar Pant. Inflation has eroded spending power and relief in tax “can provide the much-needed thrust to the consumption demand.”

Prime Minister Narendra Modi’s final full-year spending plan before 2024 polls comes amid rising interest rates and slowing global growth, which could make him desist from outright populism. Economists in a Bloomberg survey see fiscal deficit narrowing to 5.9% of gross domestic product, from 6.4% this year, needing another year of record borrowing

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