She said that the government’s efforts to restore the economy went through the way of capital spending.
New Delhi:
Union Finance Minister Nirmala Sitharaman said on Friday that the new tax system will leave the higher disposable income in the hands of the people.
Responding to the discussion in the Lok Sabha on the state budget on Friday, she said that the government’s efforts to revive the economy after the pandemic were through the path of capital spending.
To a query from a member who cited figures on tax savings from the old tax system, she said that saving Rs 4.5 lakh from an income of Rs 9 lakh would be a grueling exercise.
“Since the enhanced deduction limit is unconditional, it leaves the higher disposable income in the hands of the people,” said Seetharaman.
In the budget document she presented on February 1, the Finance Minister made major announcements regarding personal income tax. The deduction limit in the new tax regime has been increased to Rs 7 lakh.
The tax structure was changed in the new personal tax system by reducing the number of panels to five.
The new income tax system has been made the default tax system. However, citizens will still have the option to take advantage of the old tax system.
In her reply today, Sitharaman also said that the budget is balancing the demands of development requirements in India.
“In simple words, the 2023-24 budget cleverly balances the demands of India’s development necessities within the bounds of fiscal prudence. This is a very difficult balancing act, it is a very balancing tactic,” Sitharaman said.
She added, “Since the pandemic when the economy fell by minus 23, our efforts to revive the economy have been through the way of capital expenditure (the way of capital spending) on the part of the government. This is because it has a huge multiplier effect.”
Capital investment expenditure is sharply increased for the third year in a row by 33 per cent to Rs 10,000 crore, which will be 3.3 per cent of GDP. This will be nearly three times the spending in 2019-20.
The capital expenditure allocation has grown four times since 2015-16, from Rs. 2.5 crore to Rs. 10,000 crore (budget estimate for 2023-24).
This increase in recent years, Sitharaman said, has been central to the government’s efforts to boost growth potential and job creation, mobilize private investment and provide protection against global headwinds.
The fiscal deficit has decreased steadily from 7.3 percent in 2020-2021 to 5.9 percent in the budget for 2023-24. In 2022-23, it was pegged at 6.4 percent.
(Except for the headline, this story was not edited by the Alendronaterx staff and was published from a syndicated feed.)
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