Every year, on February 1st, the Finance Minister (FM) presents a budget that outlines how the government will earn, spend, and invest money. It’s a big moment for everyone – businesses, markets, and ordinary people!
Remember September 20, 2019? The Sensex (a big stock market index) shot up by over 5% because the FM announced lower corporate tax rates. This made companies more profitable and gave hope to investors.
Now, there’s talk about new tax reforms focusing on personal income tax. In the financial year 2023-24, only about 7.29 crore people submitted income tax returns, which is surprising given India’s 140 crore population! It shows that tax responsibilities mostly fall on a small group of individuals, with about 70% of return filers declaring no income.
The current tax system is complicated. Here’s how it works:
1. Companies pay taxes on their earnings.
2. Individuals pay taxes on their salaries.
3. Shopping comes with Goods and Services Tax (GST).
4. When you sell an investment, you pay capital gains tax.
So, it’s like this: Income – Tax – Savings – Tax = Money left to spend. This heavy tax burden limits how much money people have and sometimes discourages them from following tax rules.
To fix these issues, the government could take two important steps:
1. Change personal income tax rates to make it easier on taxpayers, like raising the basic exemption limit or giving more relief.
2. Sell shares of public companies to earn money. This could help meet revenue targets. Companies in areas like defense, railways, and infrastructure could be sold off.
Even if sold at a lower price, it could bring in lots of money, letting tax reliefs help people invest back into these companies.
With the right decisions, the budget could be a game-changer, sparking another market rally like the “Nirmala Sitharaman Candle.” These personal tax reforms and smart company sales could boost spending, strengthen markets, and help everyone grow.
As we prepare for February 1st, let’s watch for announcements that could reshape finances for people and businesses alike. With good decisions, this budget could kickstart India’s growth for years to come!
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