Highlights of Union Budget 2023-2024

Union Budget 2023, presented by Finance Minister Nirmala Sitharaman, aims to address ongoing challenges and strengthen the Indian economy in the forthcoming years. The budget focuses on seven priorities: inclusive development, reaching the last mile, infrastructure and investment, youth power, green growth, and unleashing potential along with the financial sector.

In a big boost for taxpayers and the economy, the Minister announced significant changes under the new tax regime for tax slabs, a significant increase in the money allocated for the development of railways and capital expenditure. The budget also includes measures to boost consumption, ease the burden of compliance, benefit the existing and new MSMEs as well as the middle class, and also streamline and simplify the entire tax system.

With infrastructural upgrades, enhanced Capex, and incentives, especially for the key sectors, the Indian economy is on the right path towards its goal of becoming a $5 trillion economy. The budget aims to support this goal and provide a brighter future for the country. Citizens eagerly awaited the Union Budget 2023, and it did not disappoint, providing a comprehensive plan for the country's development and growth. The budget focuses on inclusive growth, reaching all parts.

1). Direct Tax:

• Now, the new version of the New Tax Regime, which was introduced in the 2020 Union Budget, would be the tax regime by default for every individual when filing their returns. However, taxpayers can also opt for the Old Tax Regime if they want.

• The basic exemption limit increased to Rs. 3 lakhs from Rs. 2.5 lakhs under the New Tax Regime only.

• Tax slabs for FY 2023-24 (AY 2024-25):

  • Income upto the level of Rs 3 lakhs p.a.- NIL Tax.
  • Income more than Rs 3 lakhs but upto Rs 6 lakhs- 5%.
  • Income more than Rs 6 lakhs but upto Rs 9 lakhs- 10%.
  • Income more than Rs 9 lakhs but upto Rs 12 lakhs- 15%.
  • Income more than Rs 12 lakhs but upto Rs 15 lakhs- 20%.
  • Income more than Rs 15 lakhs- 30%.

• Introduction of tax rebate of Rs 7 lakhs under section 87A and the standard deduction is now introduced upto Rs 50,000 under the new tax regime.

• Reduction of the highest level of surcharge from 37% to 25% for people earning beyond Rs 5 crores, bringing down their applicable tax rate from a whooping 42.74% to only 39%.
• Leave encashment limit raised to Rs. 25 lakhs from Rs. 3 lakhs.
• Capital gain exemption capped at Rs. 10 crores for reinvestment in a residential house.

2). Indirect Tax

• No returns or statements are allowed after three years from the relevant due dates.
• No input tax credit for goods or services used for Corporate Social Responsibility (CSR).
• The compounding amount was reduced by 25% to 100% of the tax amount.
• 146 exemptions extended for one year until 31 March 2024 for review.

3). Agriculture

• Agricultural credit target raised to Rs. 20 lakh crores.
• PM Matsya Sampada Yojana outlay of Rs. 6,000 crores for fishermen and MSMEs
• Atmanirbhar Horticulture Clean Plant Program outlay of Rs. 2,200 crores.
• The assistance of Rs. 5,300 crores to the Upper Bhadra Project for micro irrigation and surface tank filling.
• 10,000 bio-inputs resource centres for national-level micro-fertilizer and pesticide manufacturing.
• 5G labs for precision farming and AI-based solutions in agriculture.

4). Auto

• National Green Hydrogen Mission with an outlay of Rs. 19,700 crores to reach an annual 5 MMT production target by 2030.
• Increased non-creditable custom duty rates by 2% to 4%.
• Deduction for late payment to MSMEs only when actual payment is made.

5). Chemicals

• Capital investment outlay increased by 33% to Rs. 10 lakh crores.
• Research & development grant provided for five years for indigenous production of lab-grown diamonds.
• Green credit program to incentivise environmentally sustainable actions by companies, individuals and local bodies.
• National Green Hydrogen Mission target of 5 MMT by the year 2030.

6). Consumer Product and Retail

• Capital investment rose by 33% to Rs. 10 lakh crores.
• Customs duty focused on 'Make in India' and export promotion.
• Tourism promotes entrepreneurship, job creation, and consumption.
• A concessional corporate tax rate of 15% is extended to cooperative societies.

7). Defence

• Defence budget allocation of Rs. 1,62,600 crores for capital outlay and Rs. 2,70,120 crores for revenue expenditure.
• 6.7% and 15.9% increase in budget allocation for capital and revenue expenditure, respectively, over FY 22 - 23.
• Capital Budget Allocation: Army (Rs. 37,242 crores), Navy (Rs. 52,805 crores), Air Force (Rs. 57,137 crores).
• Agniveer Corpus fund to be created with 30% government contribution, overall contribution and interest tax-free.

8). Financial Services

• Revamping of a credit guarantee scheme for MSMEs with Rs. 9,000 crores corpus and an additional Rs. 2 lakh crores collateral-free credit.
• A national financial information registry is to be set up as a central repository of financial and ancillary information.
• The threshold limit for cash withdrawal without TDS has been raised to Rs. 3 crores in cooperative societies.
• TCS rate increased to 20% on certain foreign remittances and sale of overseas tour packages.
• The sunset clause that is extended for tax-neutral transfer has been extended till the end of the financial year 2025.

9). Infrastructure

• Rs. 10 lakh crores allocation for the infrastructure sector and job creation.
• Viability Gap Funding for Battery Energy Storage Systems with a capacity of 4,000MWH.
• Investment of Rs. 20,700 crores for inter-state transmission system for renewable energy evacuation.
• Coastal shipping is promoted as an energy-efficient transport through PPP mode with viability gap funding.

10). Life Sciences and Pharma

• Health sector allocation increased to 2.1% of GDP, with a budget of Rs. 88,956 crores.
• Focus on health infrastructure with the creation of 157 new nursing colleges.

11). Media and Entertainment

• TDS at 30% to now apply on ‘net winnings’ from online games.
• No de minimis threshold was prescribed.

12). Oil And Gas

• Allocation of Rs. 35,000 crores towards energy transition and net-zero carbon emission.
• 500 new biogas, i.e. waste-to-wealth plants, are to be set up with a total investment of Rs 10,000 crores.
• Introduction of a 5% compressed bio-gas mandate for organisations marketing natural and biogas.

13). Real Estate

• Increase in the allocation of Pradhan Mantri Awas Yojana by 66% to Rs. 79,000 crores.
• Long-term capital gain exemption capped at Rs. 10 crores.
• Distributions by REIT are to be taxed as other income in the hands of unit holders.

14). Start-Ups

• Eligibility criteria for tax benefits extended to include all start-ups that are going to be incorporated upto the end of FY 2024, i.e. 31st March.
• Carried forward losses protected for ten years from the incorporation date.
• TCS on remittances made under Liberalized Remittance Scheme increased from 5% to 20%.

15). Technology

• Centre of Excellence for Artificial Intelligence to be set up.
• Skill India digital platform to be launched for formal skilling and entrepreneurship access.

16). Telecom

• The turnover limit for presumptive taxation increased to Rs. 3 crores for MSMEs.
• 100 labs to be set up for 5G applications development.
• Duty increased on certain modems.

Note: Page created with inputs from Times of India and Economic Times