Union Budget 2023: There is Something For Everyone!

On February 1st, 2023, Hon. Finance Minister Smt. Nirmala Sitaraman presented the budget. If you live in India and earn and spend money, the budget is something that will undoubtedly affect you as a citizen. The Budget centered on seven priorities, dubbed the “Saptrishis guiding us through Amrit Kaal” by Sitharaman, namely

1. Inclusive Development
2. Reaching the Last Mile
3. Infrastructure & Investment
4. Youth Power
5. Unleashing Potential
6. Financial Sector
7. Green Sector

The Budget for 2023-24 maintained its emphasis on increasing Capex, demonstrating the government’s priority of building infrastructure, roadways, and rail tracks. The middle class has received some relief in the form of tweaks to the new income tax regime, clearly indicating that the government prefers the new regime over the old one.

The FM adhered to the fiscal deficit action plan in the Budget, with a target of 5.9% in FY 2024 and a target for the current fiscal year. There appears to be something in the budget for everyone, and let us go over the key highlights of Union Budget 2023 to see how true this is.

The Bigger Picture: Budget 2023

The Budget 2023 Allocation:

Ministry	Amount
Defense	5.94 Lakh Crores
Railways	2.41 Lakh Crores
Road Transport & Highways	2.70 Lakh Crores
Home Affairs	1.96 Lakh Crores
Consumer Affairs, Food & Public Distribution	2.06 Lakh Crores
Chemicals & Fertilizers	1.78 Lakh Crores
Rural Development	1.60 Lakh Crores
Communications	1.23 Lakh Crores
Agriculture	1.25 Lakh Crores

What are the Key Highlights of Budget 2023?

Tax Relief to Individuals

After a dry spell of positive news in tax slabs, The salaried class in India received their Budget. In her speech, the FM announced a reduction in the income tax limit to 7 lakhs in the new tax regime. She also reduced the number of slabs to five, which will be as follows:

Income Slabs	Tax Rates
0-3 Lakhs	0%
3-6 Lakhs	5%
6-9 Lakhs	10%
9-12 Lakhs	15%
12-15 Lakhs	20%
More than 15 Lakhs	30%

• The income limit for Rebate has been increased from 5 lakhs to 7 lakhs.
• The current highest tax rate is 42.74%. In the new tax regime, the highest surcharge rate is proposed to be reduced from 37% to 25%. the maximum tax rate will be reduced to 39%.
• The Finance Minister maintained LTCG while praising the stock exchanges.
• The benefits of the standard deduction are extended to salaried taxpayers and pensioners. Every salaried individual earning Rs 15.5 lakh or more will benefit by Rs 52,500.
• The retirement leave encashment limit for private sector employees has been raised to 25 lakhs.
• The Senior Citizen Savings Scheme’s maximum deposit limit will be raised from Rs 15 lakh to Rs 30 lakh.

Things To Be Noted: According to the finance minister, the New Tax Regime will become the default scheme. Citizens will, however, be able to continue to benefit from the old tax regime. The New tax Regime (Budget 2020) Will be replaced by a New tax Regime (Budget 2023)

Benefits to Businesses

Finance Minister Nirmala Sitharaman announced in her 5th Budget presentation that further over 39,000 compliances have been scaled back and over 3,400 legal provisions have been decriminalized to improve the convenience of doing business.

• The PAN will be used as a common business identifier. According to the Minister, the government will implement a National Data Governance policy that will simplify the KYC process while preserving the privacy of individual data.
• Tax exemptions will be extended to businesses relocating or establishing in GIFT City until March 31, 2025.
• The government will create a National Data Governance Policy to spur start-ups and academia to innovate and conduct research.
• A Rs 9,000 crore infusion will be made into a credit guarantee scheme for hit micro, small, and medium enterprises (MSMEs), a sector devastated by the pandemic. This will allow for Rs 2 trillion in collateral for MSMEs’ loans.
• Presumptive taxation is available to micro-enterprises with a turnover of up to 2 crores and to certain professionals with a turnover of up to 50 lakhs. It was proposed to give taxpayers (with cash receipts of less than 5%) increased limits of 3 crores (From 2 Crores under section 44AD) and 75 lakhs (From 50 Lakhs under section 44ADA), respectively.
• Manufacturing startups will continue to benefit from the 15% tax rate that is currently available to new manufacturing companies until March 31, 2024.
• Now, Startups can extend their incorporation date for IT benefits until March 31, 2024. The benefit of carrying forward losses on shareholding changes for up to ten years after incorporation.
• A higher limit of 2 lakhs per member is to be provided for cash deposits to and cash loans by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative
• Agriculture and Rural Development Banks (PCARDBs).
• Co-operative societies now have a higher TDS limit of 3 crores on cash withdrawals.

Things to be Understood: Digilocker’s simplicity of KYCs/common business identifiers will reduce compliance costs and increase speed for all stakeholders.   A credit guarantee of Rs. 9000 crores will help MSMEs get more credit, with a multiplier effect of up to Rs. 2 lakh crores, while lowering the cost of credit.   Increasing the Presumptive taxation limit will improve MSMEs’ compliance and reduce the time and cost associated with it, bringing more MSMEs into the formal sector.

Indirect Tax Proposals

The government is steadfast in its efforts to simplify indirect taxation, particularly GST and Customs on various products, in order to promote higher exports, higher domestic manufacturing, more value addition to the economy, and green energy and mobility. But, in common parlance, we as citizens are more interested in understanding what will become more expensive and what will become less expensive after the budget of 2023. So there you have it.

What Will Get Cheaper?

• The basic customs duty on seeds that are used in the production of lab-grown diamonds will be reduced.
• To encourage exports, the government will reduce customs duties on shrimp feed.
• Customs duty reduction on certain inputs for mobile phone manufacturing.
• The government will maintain a 2.5 percent basic customs duty on copper scrap.
• The duty on parts of open cells in TV panels has been reduced to 2.5%.
• Machinery for producing lithium-ion cells for use in electric vehicles, as well as raw materials for the production of CRGO steel, ferrous scrap, and nickel cathode, will become more affordable.

What Will Get Expensive?

• The basic customs duty on gold articles has been raised.
• The customs duty on kitchen electric chimneys is increased from 7.5% to 15%.
• Cigarette taxes went up by 16%, the first increase in nearly three years.
• The general import duty on compounded rubber was raised from 10% to 25%.
• Fully imported luxury cars and electric vehicles will cost more as the government raises customs duty from 60% to 70%.
• Among other things, imported bicycles and toys, articles made of gold, platinum, imitation jewelry, silver bars, and articles will become more expensive.

Emphasis on Digital India

The recent issuance of Indian digital currency, as well as numerous digital schemes, demonstrates the government’s ongoing efforts to promote digitalization in the country. The government stated a wide range of schemes and propositions to move forward to ‘Digital India’.

Digital Public Infrastructure for Agriculture

The platform will provide inclusive, farmer-centric solutions through pertinent information services for crop management and health, enhanced access to farm inputs, credit, and insurance, crop estimation guidance, marketing research, and endorse for the expansion of the agri-tech industry and start-ups.

The National Digital Library

The platform will primarily serve children and adolescents, facilitating the availability of high-quality books in a variety of languages, genres, and levels. The government will also work with non-governmental organizations to provide age-appropriate reading material to everyone in an effort to instill a reading culture.

National Data Governance Policy:

The government will develop a data governance policy to allow start-ups and academia access to anonymized data for innovation and research.

Sector-wise Top Highlights of Budget 2023

• Infrastructure: A Rs 75,000 crore investment will be made to modernize and revitalize 50 additional airports, heliports, water aerodromes, and advanced landing zones across the country. Private sources have contributed Rs 15,000 crore to 100 critical transport infrastructure projects for the steel, ports, fertilizer, coal, and foodgrain sectors.
• Hospitality: 50 destinations will be chosen through a challenge mode and developed as a complete package for domestic and international tourism.
• Agriculture:10,000 bio input resource centers and a network for distributing micro fertilizer and pesticide manufacturing will be established to assist 1 crore farmers in adopting natural farming.
• Education:38,800 teachers and staff will be hired for 740 schools that will serve 3.5 lakh tribal students, and 157 nursing colleges will be established alongside the existing 157 medical colleges.
• Women Empowerment: The Mahila Samman Savings Certificate, which allows savings of up to 2 lakhs for two years at 7.5%, was introduced. Rural women have been mobilized into 81 lakh self-help groups, with the government providing raw materials and marketing for the products.

The Goods & Bads of Budget 2023

The budget appears to be well received by the nation, but many people have mixed feelings about it. The budget contains some inconsistencies, some drawbacks, and some positive aspects. Let us examine what is a good promise and what comes as a surprise or disappointment in Budget 2023.

The Good:

1. Capital investment has been increased by 33% to Rs 10 lakh crore, accounting for 3.3% of GDP.
2. PMGKAY is a scheme that will provide free food grain to all Antyodaya and priority households for the next year.
3. The government is still committed to reducing the fiscal deficit to 4.5% of GDP by 2025-26.
4. The Indian government has announced the Atma Nirbhar Clean Plant Programme, which will cost Rs. 2,200 crores.

The Bad:

1. The Department of Space expenditure has been reduced by 8% in the 2023-24 Union Budget, from 13,700 crores in the previous Budget estimate to 12,543.91 crores.
2. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme received only 60,000 crores in the Union Budget for 2023-24. This is 18% less than the current year’s budget estimates and 33% less than the scheme’s revised estimates.
3. The government is eager to boost tourism, but there has been no increase in budget allocation, which has remained at Rs. 2,400 crores since last year.
4. The allocation for the Census Survey and Statistics head has been reduced from 3,676 crores to 1,565 crores in 2022-23.
5. According to the Union Budget, an individual will be required to pay tax on the maturity amount of life insurance policies where the aggregate annual premium exceeds 5 lakhs..
6. The amount that the government intends to raise through disinvestment or privatization of state-owned enterprises is not mentioned separately in the Budget for 2023-24.

The Final Word

India’s budget for 2023 has shown a positive effect on the economy. This Indian Budget strongly suggests that the government’s economic strategy will be maintained. It is daring and innovative, with the hope that good economics is the need of the hour rather than petty politics.

The Budget’s big picture is its emphasis on growth through higher productive capital spending while maintaining fiscal prudence, which will result in lower interest rates for the private sector in the near to medium term, encouraging them to invest.