FM says new tax regime has been made 'very attractive'
Nirmala said the Budget focuses on middle class, employment generation, MSMEs, agriculture sector, rural population, health and green growth
NEW DELHI: Finance minister Nirmala Sitharaman on Friday said that the government chose the capital expenditure (or capex) route to revive the economy as it has a great multiplier effect. She also said the new tax regime has been made “very attractive”, emphasising on moderation in personal taxes for the middle classes in the country. “In the new tax regime, offering a rebate on annual income of up to Rs 7 lakhs will leave higher disposable income in the hands of the people,” she added.
Replying to the general discussion on Budget 2023-24, Ms Sitharaman also told the Lok Sabha that India was still the fastest-growing major economy and will continue to be so in future. She said the Budget also focuses on the middle class, employment generation, MSMEs, the agriculture sector, the rural population, health and green growth, among others. “Besides, fiscal prudence is maintained as announced in the fiscal glide path in the Budget, which astutely balances the requirement of development imperatives within the limits of the fiscal position,” Ms Sitharaman said.
In the 2023-24 Budget, Ms Sitharaman has raised long-term capital expenditure by 33 per cent to Rs 10 lakh crores, continuing this government’s trend since 2014 to ramp up capital spending on infrastructure and similar sectors. The record outlay also boosted the strategy to revive growth in the aftermath of the Covid-19 pandemic.
Elaborating on the new tax regime, she claimed it has been made “very attractive”, emphasising on moderation in personal taxes for the middle classes and salaried people across the country. “Under the revamped concessional tax regime, which will be effective from the next fiscal, no tax would be levied for income up to Rs 3 lakhs. Also, income between Rs 3-6 lakh will be taxed at five per cent; Rs 6-9 lakhs at 10 per cent, Rs 9-12 lakhs at 15 per cent, Rs 12-15 lakhs at 20 per cent and income of Rs 15 lakhs and above will be taxed at 30 per cent,” she said, adding no tax will be levied on annual incomes of up to Rs 7 lakhs.
Responding to RSP member N.K. Premachandran's remark that the new tax regime will not be beneficial for a person earning Rs 9 lakhs annually and having an investment of Rs 4.5 lakhs in tax savings instruments, Ms Sitharaman said for a person saving Rs 4.5 lakh will be an “effort-ridden exercise” and for a person earning Rs 9 lakhs, it is not always possible to have Rs 4.5 lakhs as saving and then also have enough money to spend on your family,” she said.
Amid walkouts and noisy scenes in the Lok Sabha, the finance minister also countered the Opposition’s allegations on reduction of food subsidy as its allocation in this year’s Budget was down 32 per cent from last year’s Budget. However, she claimed that the food subsidy has been almost doubled to Rs 1.97 lakh crores. “There’s no reduction in it. The cost of PM Gareeb Kalyan Yojana and public distribution system (PDS) is being fully borne by the Centre,” she said.
On the issue of employment and agriculture credit target, Ms Sitharaman also strongly defended the government’s move, saying the 2023-24 Budget was a balanced one in all aspects. On the employment front, she said the government has already offered about 10 lakh jobs with the interests of states being of paramount importance and promised job opportunities, training and skill development for the youth. For the agriculture credit scheme, she said the credit target for 2023-24 has been increased to Rs 20 lakh crores.