Negative response from the public post-budget presentation by Finance Minister Nirmala Sitharaman on July 23, 2023.
Even staunch Modi supporters expressed anger, claiming middle class is being exploited while wealthy friends are favored.
Examples of changing sentiments through tweets from supporters.
Taxation Details
Capital Gains Tax
Short-Term Capital Gains (STCG)
Increased from 15% to 20%.
Long-Term Capital Gains (LTCG)
Increased from 10% to 12.5%.
Exemption limit increased from ₹100,000 to ₹125,000 for profits.
Impact on Investors
Investors in stock markets and futures/options trading are facing higher tax burdens.
Securities Transaction Tax
Futures Trading
Increased from 0.0125% to 0.02%.
Options Trading
Increased from 0.0625% to 0.1%.
Economic Justifications
Reference to Economic Survey 2023-2024 suggesting that excessive market claims lead to instability, indicating concerns over stock market bubbles.
Stress on the need to discourage speculative trading and high-risk investments, especially in the context of AI impacting employment.
Unemployment and Job Creation
Unemployment Statistics
44.49% unemployment rate among the 20-24 age group as of early 2024.
Government aims to create 7.85 million jobs annually until 2030.
50% of graduates are reportedly unemployable due to skill gaps.
AI seen as a major disruptor for all job levels.
Tax Changes and Benefits for Middle Class
Minor increases in income tax benefits:
Standard deduction raised from ₹50,000 to ₹75,000.
Changes in tax slabs to benefit middle-class income earners, but overall benefits are minimal.
Property and Real Estate Taxes
Non-Financial Assets
LTCG tax on property reduced from 20% to 12.5%, but indexation benefits removed, potentially increasing overall tax burden.
Indexation previously adjusted for inflation, now properties purchased from 2001 onwards won't have this benefit.
Startups and Angel Tax
Removal of Angel Tax on startups issuing shares above fair market value is a positive change praised across party lines.
Government Schemes Announced
First Time Employment Support: Financial aid for first job holders.
Manufacturing sector benefits for employers and employees.
Employer Support: Financial contributions for new hires.
Skilling Scheme: Targeting 2 million youths.
Internship Opportunities: 1 million youth targeted for internships in top companies.
State Allocations
Increased financial allocations for Andhra Pradesh and Bihar, raising questions about political motivations behind funding.
₹150 billion for Andhra Pradesh and ₹600 billion for Bihar for infrastructure projects.
Income Inequality Concerns
Growing income inequality highlighted, with the rich getting richer and the poor getting poorer.
Emphasis on promoting middle-class growth, small businesses, and higher taxation on billionaires.
Comparison of current inequality levels to those during British rule.
Conclusion
The effectiveness of the new policies remains to be seen; skepticism exists on whether these will rectify income inequality and support middle-class growth.