On February 1st, finance minister Nirmala Sitharaman released the union budget 2023. When budgets are released, there is a huge lot of anticipation going on, as it tends to affect the country’s economy and the general public’s finances directly.
However, most of the time, these budgets tend to fall short of actually curbing any issues faced by the government and general public equally. Union Budget 2023 was not that much different from the Union Budget 2022 either.
You can even say that most of the policies and schemes are just a re-do or repackaging of the older ones.
However, one thing that made people happy in general was the salaried employees, who got some tax breaks as per the new schemes. Also, some new schemes are launched that will prove to be advantageous to the MSMEs.
Key Highlights
In the financial year 2023, the GDP of India is estimated to be 7%. As part of the Atmanirbhar Clean plant Programme to increase the growth and supply of disease-free plants, the government will spend Rs. 22,000 Cr.
RBI has increased the collateral-free agricultural loan limit to Rs. 1.6 Lakh. Also, the agricultural credit will be enhanced to Rs. 20 Lakh Cr.
Farmers will also get a 2% interest subsidy which will help them get short-term loans with an effective interest of 7%. The government also plans to bring down the fiscal deficit to 4.5% of GDP from the current 6.4% of GDP.
Priorities of Union Budget 2023
Here are the 7 priorities mentioned in this year’s budget 2023:
- Infrastructure and investment
- Inclusive development
- Green growth
- Unleashing the potential
- Reaching the last mile
- Financial sector
- Youth power
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Direct Tax Highlights
Below are all the major points of the Union Budget 2023 that you should know of:
New Tax Regime
The old tax regime is not the new tax regime, however, the citizens will have a choice to opt for the old tax regime.
| Income Slabs | Income Tax Rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,000 to Rs. 6,00,000 | 5% on income exceeding Rs. 3,00,000 |
| Rs. 6,00,000 to Rs. 9,00,000 | 10% on income exceeding Rs. 6,00,000 + Rs. 15,000 |
| Rs 9,00,000 to Rs. 12,00,000 | 15% on income exceeding Rs. 9,00,000 + Rs. 45,000 |
| Rs. 12,00,000 to Rs. 15,00,000 | 20% on income exceeding Rs. 12,00,000+ Rs. 90,000 |
| Above Rs. 15,00,000 | 30% on income exceeding Rs. 15,00,000+ Rs. 150,000 |
- The standard deduction is Rs. 50,000 and under the tax regime, Rs. 7,50,000 is the tax-free slab.
- Under the new tax regime, up to Rs, 7,00,000 tax rebate is introduced. This means citizens with up to Rs. 7,00,000 will not have to pay any tax.
- The standard deduction on the family pension is Rs. 15,000 or 1/3rd (whichever is lower).
- For people earning more than Rs. 5 Cr. the highest surcharge for them is now 25% which was previously at 37%. Also, this reduces their tax rate to 39% from 42.47%.
Presumptive Taxation Limits
| Category | Previous taxation limits | Revised taxation limits |
| Sec 44ADA | Rs. 50 Lakhs | Rs. 75 Lakhs |
| Sec 44AD | Rs. 2 Crores | Rs. 3 Crores |
- On taxable withdrawal of EPF, the TDS rate is lowered from 30 percent to 20 percent.
- For non-Government employees, the leave encashment limit is raised to Rs. 25,00,000 from Rs. 3,00,000.
- For payment-based deductions, the payments to MSMEs are to be made within the time frame of 45 days which is agreed upon in writing. But in case there is no written agreement, then the payment is to be done within 15 days for the deductions.
- The new exemption limit on capital gains under sections 54 to 54F, is Rs. 10 Crores.
- For 80G donation-based deductions, the following funds will not be eligible:
- Indira Gandhi memorial trust fund
- Jawaharlal Nehru memorial fund
- Rajiv Gandhi Foundation
- From July 2023 onwards, the winnings from online gaming will carry 30 percent taxation.
Agniveer Corpus Fund
Following are some of the changes as per the Agnipath Scheme:
- Central governments’ contribution to the corpus will be eligible for the deduction as it will be taken as the income of the Agniveer.
- Contribution to the corpus by the Agniveer will be eligible for a tax deduction.
- When Agniveer or the nominee of the scheme will get any money from the corpus, it is well tax-free.
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Indirect Tax Highlights
Customs Duty
The new budget 2023 is aim to encourage domestic manufacturing and increase exports. Increased domestic value addition, enhance green energy growth and mobility. Here are the items on which customs duty has been revised:
- The imported lens of mobile cameras
- Imported capital goods for manufacturing Li-ion batteries
- Seeds for lab-grown diamond manufacturing
- Denatured ethyl alcohol
- Compounding rubber
- Extending BCD on copper scrap
- Shrimp feed primary inputs
GST Changes
- Amended Section 16, under which a recipient taxpayer is unable to pay supplier invoice plus GST in 6 months then the tax will be calculated based on Section 50.
- Amended Section 10, under which a taxpayer supplying goods through e-commerce can choose the composition scheme.
- Amended Sections 37, 39, 44, and 52 under which the filing of GSTR-1, GSTR-3B, GSTR-9, and GSTR-8 is restricted for taxpayers after three due dates.
- E-commerce operators will be penalized with Rs 10,000 or higher if:
- They allow unregistered suppliers to supply goods.
- They fail to provide correct information through GSTR-8.
- They allow the inter-state supply of goods by a registered supplier who is ineligible for supplying goods in the said states.
- CGST Act adds New section 158A. This section allows businesses to share their GST data with consent.
Infrastructure and Investment Highlights
- Railways get a planned outlay of Rs. 2.4lakh Cr.
- The capital expenditure in infrastructure is increased by 33% to reach the amount of Rs. 10 Lakh.
- Urban infrastructure development fund will be initiated with a capital of Rs. 10,000 Cr per year to help develop urban infrastructure in tier 2 and 3 cities.
- State governments will be extended with another year of a 50-year interest-free loan which will cost up to Rs. 1.3 Lakh Cr.
- Regional air connectivity will be developed by renovating and reviving 50 advanced landing grounds, heliports, airports, and water aerodromes.
Reaching the Last Mile Highlights
- PM Awaas Yojana’s outlays have seen an increase of 66% reaching over Rs. 79,000 Cr.
- 15000 Cr. outlay is proposed for the next 3 years for Pradhan Mantri Primitive Vulnerable Tribal Group to help develop vulnerable tribal groups’ socio-economic conditions.
- To cater to tribal students, the center will hire 38,800 teachers and staff in three years to set up the Eklavya Model Residential Schools.
Inclusive Development Highlights
The budget will continue funding and building the efforts of the ‘Sabka Saath Sabka Vikas’ policy for underprivileged groups.
Financial Sector Highlights
- The government will bring on board a unified IT system, for business operations in GIFT IFSC which will help in registration and approval from authorities like IRDAI, SEBI, RBI, IFSCA, and GSTN.
- MSME’s credit guarantee schemes will get a revamping with a funding of Rs. 9,000 Cr. the cost of the credit will be decreased by 1% and there will be an additional Rs. 2 Cr. collateral-free guaranteed credit.
- A one-time deposit scheme for women with a maximum limit of Rs 2 Lakh is introduced. The scheme will give an interest rate of 7.5% for a 2-year tenure.
- The deposit limit of the Postal Monthly Income Scheme is increased from Rs. 4.5 Lakh to Rs. 9 Lakh (single accounts) and Rs. 9 Lakh to Rs. 15 Lakh (joint accounts).
- The upper limit on investment in Senior Citizen Savings Scheme has increased from Rs. 15 Lakh to Rs. 30 Lakh.
Green Growth Highlights
The main aim of including the green growth agenda in the Union Budget 2023 is to achieve net zero carbon emissions by the year 2070.
- A total investment of Rs. 20,700 Crore is proposed for developing a transmission system of renewable energy from Ladakh.
- 19,700 Cr. allocated for the national green hydrogen mission which will decrease fossil fuel dependency, lower carbon intensity in the economy, and growth of green hydrogen industry.
- 35,000 Cr. allocated to achieve energy transition and enhance energy security.
- Funds are allocated as per the budget to central and state governments to replace old vehicles with new ones and also to replace old ambulances.
- Under the Environment Protection Act, Green Credit Program is introduced to environmentally conscious behavior.
- For the 4000 MWh Battery energy storage system, viability gap funding is introduced.
Unleashing the Potential Highlights
- Streamlining of the KYC process is mentioned in the budget and the PAN card will be taken as a single identifier.
- Around 3,400 provisions and 39,000 compliances are decriminalized and revoked respectively to ease the process of doing business in India.
- Vivad Se Vishwas I is introduced under which MSMEs if failed to complete their contract during the Covid-19 Period, the government will refund 95 percent of the forfeited sum.
- To complete the vision of “Make AI in India and Make AI work for India”, the government will set up 3 centers of AI excellence in three top institutes.
- To aid innovation and research by startups, National Data Governance Policy is introduced.
Youth Power Highlights
- Around 47 lakh youth under the National Apprenticeship Promotion Scheme will get a stipend from DBT in the next three years.
- To skill youth of India pursuing new age courses, PM Kaushal Vikas Yojana 4.0 will be launched.
| What got costlier | What got cheaper |
| Cigarettes | Televisions |
| Bicycles | Gold |
| Travel by flights | Lab-grown diamonds |
| Electric kitchen chimney | Smartphones |
| Silver | Li-ion batteries for phones |
| Industrial rubber | Electric vehicle’s compressed gas |
| Imitation jewelry |
So, here you go. Every union budget tends to bring something new to the table. This year’s budget too had some changes in the existing policies while some new policies were introduced.
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