India’s middle class population will have high expectations from Finance Minister Nirmala Sitharaman, who will present the Union Budget 2023 on February 1. Sources say a new tax slab rate between 8 to 10 lakh may be introduced with tax rate between 10-15 percent.
The middle class, considered the central artery of the Indian economy, has been driving the country’s world-beating growth for years. But the rising cost of living, falling income and mass layoffs across industries have significantly dented the growth of the aspirational middle class, and threaten to significantly disrupt the growth of the Indian economy in FY24.
A recent tweet by CNBC-TV18 stated that sources say the Government may recognise the contribution of the Indian middle class in the upcoming Union Budget 2023-24 by announcing a slew of measures to address concerns of the aspirational classes.
Budget 2023 to Recognise the Contribution of the Indian Middle Class:
- Government likely to announce measures to address concerns of the aspirational classes
- Budget may introduce new tax slab at 8-10 lakh with a tax rate of 10-15%, against 20% currently
- 30% tax rate on income above 10 lakhs may be reduced to 25%
- Government considering reducing some cess rates
- Benefits under 80C may be increased from 1.5 to 2 lakhs
- Tax exemption limits on housing loans may be increased from ₹2 lakhs currently
Experts believe that the middle class, especially households earning Rs 5-10 lakh annually, are suffering the most as they do not even qualify for subsidies and have to bear the full brunt of inflation. Many economists have said that inflation is like a tax on the poor and the middle class.
While the government knows that supporting the vast middle class population in its last full budget will be important ahead of the general elections in 2024, it remains hard pressed to cut spending as it aims to bring down its fiscal deficit target for next year.
For starters, the finance minister could provide a detailed roadmap of how the government plans to shield millions of middle-class households from high inflation and falling income.