News

Published: July 15, 2023
Updated: July 15, 2023

Income Tax Exemption Extended: Government Provides Relief for Individuals Earning up to ₹7.27 Lakh and Boosts MSME Sector

Union Finance Minister Nirmala Sitharaman lauds Prime Minister Narendra Modi's leadership and highlights the government's efforts in providing tax benefits to the middle class. Notably, income tax exemption has been extended to individuals earning up to ₹7.27 lakh per annum under the new tax regime. Furthermore, the government has implemented various measures to support the Micro, Small, and Medium Enterprises (MSME) sector, including a significant budget increase and initiatives to enhance liquidity and ease of doing business.

Income Tax Exemption and Standard Deduction:

Addressing skepticism, Nirmala Sitharaman clarifies the government's decision to grant income tax exemption to individuals earning up to ₹7 lakh. By examining the tax brackets, it is revealed that individuals are not required to pay any tax until their earnings reach ₹7.27 lakh. Additionally, a standard deduction of ₹50,000 has been introduced, addressing concerns regarding its absence in the new tax scheme. These measures aim to simplify the tax-paying process and enhance compliance.

Boosting the MSME Sector:

Nirmala Sitharaman highlights the government's focus on empowering the MSME sector. The budget allocation for the sector has significantly increased to ₹22,138 crore for the fiscal year 2023-24, marking substantial growth compared to ₹3,185 crore in 2013-14. The implementation of the 'Public Procurement Policy for Micro and Small Enterprises' has led to 33% of overall procurement by 158 Central Public Sector Enterprises being sourced from MSMEs, a record achievement.

Enhancing Liquidity and Ease of Doing Business:

To address liquidity challenges faced by MSMEs, the government introduced the TReDS platform (Trade Receivables Discounting System), ensuring that non-payment by buyers does not result in liquidity crunches for MSMEs and other corporations. The Open Network for Digital Commerce (ONDC) has enabled the MSME sector to tap into a vast consumer base, and India's public platforms have gained global recognition. The country's ranking in the Ease of Doing Business Index has significantly improved, climbing from 142 in 2014 to 63 in 2019.

Streamlining Regulations and Decriminalization:

In line with reducing the compliance burden, the government has repealed over 1,500 outdated laws and streamlined approximately 39,000 compliances. Notably, the Companies Act has been decriminalised, further facilitating ease of doing business. These efforts aim to create a favourable environment for businesses and encourage entrepreneurial growth.

The government's recent initiatives, including income tax exemption for individuals earning up to ₹7.27 lakh per annum and the boost to the MSME sector, demonstrate its commitment to supporting the middle class and promoting economic growth. These measures not only simplify tax obligations but also enhance liquidity, ease of doing business, and reduce compliance burdens. As the government continues to prioritise reforms and economic development, these efforts are expected to contribute to a prosperous and inclusive economy.