3 Feb 2023, 20:38 — 3 min read
The Budget halwa has been sweet for all. It has been well balanced save for a few changes which have been considered negative. The overall big picture of the Union Budget has been to increase the capital expenditure by 33% which was a surprise to all of us in the financial community while maintaining fiscal discipline. The budget has been on the right track and puts money in the focus areas as understood by us.
Let us talk about beneficiaries.
The limit for Senior Citizen Deposits has been doubled to 30 lakhs from 15 lakhs at 8%. For a couple, it implies 60 lakhs of fixed deposits at 8% which takes care of the basic needs.
Capex results in a flurry of activity and a multiplier effect. Those supplying to Railways stand to gain. Also, at a broader level, presumptive taxation limits have been increased from 50 lakhs to 75 lakhs for professionals and 2 crores to 3 crores for enterprises subject to certain terms. To avail of the increase in Capex working capital will also be needed. Government has ensured a reduction of interest rates by 1 per cent in a rising interest rate environment on an unsecured basis. This increases the capability to take risk in a calculated manner.
In addition, custom duties have been reduced on certain items which are needed by industry. This tendency of the governments to tinker with customs duty needs to be reflected upon. It only makes Industry weak in the longer term scheme of things.
Slabs have been revised under the new regime. If you are availing concessions under old deductions it is prudent to continue with the same, if not then coming to the new regime could be beneficial. That said the cost benefit analysis needs to be the base of every financial decision which one needs to keep in mind.
You can go ahead and evaluate accordingly. If you are in the highest tax bracket effective tax rate becomes 39% which is quite a saving and can aid additional consumption.
In Investments the old rules remain the same with regard to Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG) for equity opportunities. One loophole has been plugged on Market Linked debentures removing the indexation on the same. We may see representation by some sectoral bodies like the NBFC associations.
I would rate this budget as 8.5 out of ten considering the world we are in.
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Posted byAnirudh Anand Gupta
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