How Can Union Budget 2023-24 Affect Your Personal Finances

The Union Budget is an annual financial statement presented by the Finance Minister of India, outlining the government's financial plans for the upcoming fiscal year. (Head over to this blog to understand more about the Budget)

The Union Budget for 2023-24, which will be presented on 1st February 2023, can likely impact your personal finances.

Let’s quickly go over the few announcements you should watch out for and how they can likely impact you.

Taxes:

One of the key areas where the Union Budget may affect your personal finances is in the area of taxes. Any announcement related to changes to tax laws, such as change in income tax slabs or deductions, has a direct impact on individuals’ income tax liability.

For example, if the government increases the tax slab rates for individuals earning above a certain income, it will result in higher taxes for those individuals. On the other hand, any introduction in tax deductions for certain expenses, such as investments in specified savings instruments, SIP, market trading, etc. it will result in a lower tax liability for individuals.

Interest Rates:

Another area where the Union Budget may impact your personal finances is through changes to interest rates. A change in interest rates on various financial products, such as fixed deposits and home loans, can directly impact your returns on these products.

For example, if the government raises the interest rates on fixed deposits, it will result in higher returns on these deposits for individuals. Whereas any increase in interest rates on home loans can result in higher interest outgo for individuals availing these loans.

Changes To Insurance Policies:

The government may announce changes to the tax benefits available on various insurance policies, such as health insurance and life insurance. This can affect an individual's decision to purchase and continue with these policies.

Subsidies And Welfare Schemes:

The Union Budget may also impact your personal finances through changes to subsidies and welfare schemes. Changes in subsidies on various products, such as cooking gas and fertilizers or even any subsidy in stamp duty charges for housing purchases, can directly impact the prices of these products and, in turn, impact the overall cost of living for individuals.

Similarly, announcements related to changes in welfare schemes, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) or the Pradhan Mantri Fasal Bima Yojana (PMFBY), can impact the livelihoods of individuals in rural areas.

PF & EPFO Contributions:

Any developments to the percentage of basic salary that employees and employers are required to contribute towards Provident Fund (PF) and Employees' Provident Fund Organisation (EPFO) can affect an individual's take-home salary and savings for retirement.

Changes To The STT And LTCG:

The government may announce changes to the tax on securities transactions such as the Securities Transaction Tax (STT) and long-term capital gains on equity investments i.e. the Long-term Capital Gains Tax (LTCG). This can affect an individual's decision to trade in the markets and the taxes they will have to pay on the gains of market trades.

Changes To The FPI Regulations:

Changes to the regulations for foreign portfolio investment (FPI) in Indian markets can also affect the stock markets and investments in India. This can affect an individual's decision to invest in Indian markets through foreign portfolio investment, and the returns they can expect to earn.

Regulations For AIFs:

The government may announce changes to the regulations for Alternative Investment Funds (AIFs), such as Real Estate Investment Trusts. (REITs) and Infrastructure Investment Trusts (InvITs). This can affect an individual's decision to invest in such funds and the returns they can expect to earn from these investment classes.

Regulations For The Commodity And Forex Market:

Changes to the regulations for the commodity and the forex market, such as the margin requirements, contract expiry, settlement dates, etc. can affect an individual's decision to trade in these markets.

Public Sector Bank Interest Rates:

The government may announce changes to the interest rates offered by public sector banks (PSBs) on various savings and deposit products. This can affect an individual's decision to invest in these products and the returns they can expect to earn.

Capital Gains Tax:

The government may announce changes to the tax rules for capital gains, such as the tax rates and holding period for long-term capital gains. This can affect an individual's decision to sell investments and the taxes they will have to pay on the gains.

Gold Import Duty:

The government may announce changes to the import duty on gold. This can affect an individual's decision to purchase gold and the overall cost of the metal.

So those were some of the key points an individual should watch out for in this year’s Union Budget announcements.

Overall, the Union Budget for 2023-24 is expected to have an impact on your personal finances. While some of the announcements in the budget may result in higher costs or lower returns, others may result in lower costs or higher returns.

It's important to understand how these changes may impact your finances so that you can plan your and manage your investments effectively.

Read More : Budget 2024 updates