Budget 2023: Assocham seeks to increase personal I-T exemption limit to Rs 5 lakh

The Associated Chambers of Commerce and Industry of India (Assocham), an industry association, made a strong argument for doubling the income tax exemption ceiling to Rs 5 lakh in the upcoming Budget in order to promote the economy's spending.

The maximum amount of income that is now exempt from income tax is Rs 2.5 lakh. For people between the ages of 60 and 80, the amount is Rs 3 lakh, and for seniors over the age of 80, it is Rs 5 lakh.

According to Assocham President Sumant Sinha, businesses in industries like steel and cement are starting to plan to expand their capacity.

The global economy could enter a recession, which would have an impact on the external sector and potentially have an impact on India's gross domestic product (GDP), he said when discussing the downside risks.

The chamber recommended in its pre-Budget recommendations that the government raise the income tax exemption level to at least Rs 5 lakh so that more discretionary money is left in the hands of consumers and the economy receives a consumption boost and a further leg up in the recovery.

According to Sinha, the government should have enough room to raise the income tax exemption threshold because both direct and indirect taxes are performing well.

As India aims to become a major energy producer, the government must react to the aggressive measures other countries are taking to boost the development of green hydrogen. To encourage job creation and a green economy, he said, attention should be paid to sustainable and green industries.

''Boosting consumption by leaving more money in the hands of the consumers is a low hanging fruit for a further recovery in economic growth," said Deepak Sood, Secretary General, Assocham.

The chamber claimed that, in addition to consumption, significantly supporting investment would be the other route to sustainable growth.

It stated that all industries, including services, can benefit from the 15% corporate tax rate for new investments in manufacturing.

Another relief measure was proposed, with the recommendation that the interest rate for late GST payments be lowered from 18 to 12 per cent. "The penal interest rate of 18 per cent is too high, particularly for MSMEs," it said.

Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2023-24 in February in the Lok Sabha.

When asked about the investment outlook for India Inc., Sinha expressed his opinion that businesses in industries like steel and cement were now starting to plan capacity expansions, which was essential because as consumer demand increases, if productive capacity is not increased in some of these areas, higher inflation will result.

When discussing the negative risks to the economy, he mentioned that the possibility of a global recession, which would affect our external industry and maybe have an effect on GDP, was raised.

But Sinha also said that oil and commodity prices will decline, which will be good for India.

Sharing his views on the Production Linked Incentive (PLI) schemes, the Assocham President observed that "there are clearly more applicants that are coming in than there is money to be allocated, not in all sectors but certainly in some sectors."

He proposed that money be redistributed across the PLI regions by the government.

In response to a query, he stated that the technology industry is experiencing the majority of employment losses worldwide.

"It might go into other manufacturing sectors eventually but right now the front end is really in the tech sector and part of the reason is that the tech sector had hired a lot more ahead from where they were from a demand standpoint," he said, adding that as global demand is slowing down, some of the companies are having to pare their headcount.

According to Sinha, some of these companies' fundraising efforts were a major factor in the hiring process in India. Moreover, he said that financial issues rather than economic factors are to blame for the layoffs.

Also Read: Union Budget 2023 LIVE updates: Finance Minister Nirmala Sitharaman to table budget today