India Budget 2023
The energy industry wants petroleum products under GST in Budget 2023, which Finance Minister Nirmala Sitharaman will present in Parliament on February 1, to bring down costs. They also expect that the Centre consider bringing electricity tariffs and real estate under GST at some stage over the medium term. “Until the time petroleum products are brought within GST net, suitable amendment in the excise laws be made to allow credit of GST paid on inputs/input services and capital goods against payment of excise duty to the manufacturers of petroleum products,” the Federation of Indian Chambers of Commerce & Industry (FICCI) said in a pre-budget memorandum.
Dalal Street is a bit edgy about FM’s call on long-term capital gains (LTCG) tax rates in Budget 2023. Tax experts feel any tinkering with LTCG tax rates could dampen investment sentiment. Britain provides an exemption up to GBP 12,300 for capital gains, beyond which the gains are taxed at 10 percent. LTCG gains are taxed at 15 percent in the US and in Thailand, while the rate goes up to 20 percent in Australia.
The debate is whether the FM will leave a considerable amount of wealth with investors to boost equity market sentiment or get her pound of flesh from recent gains.
Here are a few expectations on the current tax rate
- An LTCG tax of 10 percent on all equity investments held for more than a year without indexation benefits. This will cover three classes of assets — equity, non-equity financial assets and all others including real estate.
- A holding period of two years for all financial investments, which would mean debt fund holdings may get their period reduced from the current three years.
- Bring listed and unlisted equity holdings at par for taxation.
- Reduce holding period requirement for debt mutual fund units to two years.
- Capital gains from real estate transfer is exempt to the extent it is invested in government of India-specified bonds, subject to a limit of Rs 50 lakh. One of the expectations from the budget is that this limit be enhanced.
- The above benefit can also be extended to all LTCG, instead of limiting it to only gains on sale of land or building.– The current regime does not entitle taxpayers to the rebate (of up to Rs 12,500) on tax payable on LTCG on the sale of listed equity shares, equity-oriented mutual fund units and units of REITs/ InvITs, which should be permitted.
Space Sector Expectations From Budget
The private space sector is expecting a space-based production linked incentive (PLI) scheme for space tech startups to help boost local manufacturing and encourage capability building within the country. The sector wants government to provide financial support through loans, grants and tax incentives to the companies and organisations in the space sector.
Most space-tech companies in India are startups and access to capital is an issue. India’s space economy was pegged at USD 9.6 billion in 2020 and was expected to touch USD 12.8 billion by 2025, according to a report released by EY last year.
More Vande Bharat trains expected
Last Budget saw finance minister Nirmala Sitharaman laying out the grand plan of introducing 400 semi-high-speed, next-generation Vande Bharat trains in the next three years. This may go up in Budget 2023. The Centre is likely to unveil plans for another 400 new Vande Bharat trains and gradually replace all existing high-speed trains, including the Rajdhanis and Shatabdis, to increase the speed on major routes to over 180 kmph.
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