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Tax benefits to increase disposable income likely in India's Union Budget

Other News 22 January 2022 12:41
Tax benefits to increase disposable income likely in India's Union Budget

The government may consider incremental tax benefits to increase net disposable income of the citizens in order to boost demand when it tables the Union Budget FY23 in the Parliament on February 1.

Brokerage firm KR Choksey said in a report that the government is expected to further target infrastructure spending to create a multiplier effect and increase job opportunities.

Moreover, it may continue to introduce structural reforms and boost privatisation to attract long-term capital from foreign institutional investors (FIIs). The government may also consider incremental tax benefits to increase net disposable income of the citizens to boost demand.

As per the report, the government will put more focus on tax compliance by being more vigilant. Also, there might be some hike in GST rates of some selected products and services by the GST Council to boost GST revenue further.

There might be some changes in InvIT and REIT tax structures with the objective of bringing long-term capital gains treatment at par with other asset classes.

"With robust direct tax collection, we do not envisage any tinkering with the existing income tax slabs, though some incremental tax benefits by the government cannot be ruled out," the report said.

"Given the limited headroom for monetary policy action, fiscal measures have become imperative, and we expect the government to address 'demand' side factors in the upcoming Budget," it added.

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