Hailed by the Finance Minister Nirmala Sitharaman, Prime Minister Narendra Modi, the Union Budget 2023-24 also being called as “Amrit Kaal’s first budget” provides a foundation to fulfil resolve for a developed India.
According to many industry leaders, the budget gives priority to the deprived and will fulfil the dreams of the aspirational society, farmers, and the middle class.
Among the key takeaways of the Budget are big incentives under the new income tax regime and a big push in capex.
Here are the Top 10 announcement of this year’s Union Budget
1) Capital Expenditure Target Up by 33%
Nirmala Sitharaman in the Union Budget for 2023-24 has raised the capital expenditure (capex) target by 33% to Rs 10 lakh crore, which will be 3.3% of the GDP (The ratio of capex-to-GDP during the current financial year was 2.7%).
The money that the government spends on developing buildings, machinery, equipment, schools, and infra is known as capital expenditure (Capex).
2) Revised fiscal deficit estimated to be 5.9% of GDP
Aiming to reach a fiscal deficit level below 4.5% of the GDP by 2025-26, the Finance Minister has fixed the deficit for 2023-24 at 5.9%, well below the 6.4% budgeted for 2022-23.
The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government.
3) KYC procedure to be simplified
FM Sitharaman has proposed usage of Permanent Account Number (PAN) cards as a common identifier for all digital systems at government agencies. The change is anticipated to streamline the KYC procedure and make it easier for the Income Tax Department and other governmental organisations to manage the PAN cardholders’ documentation.
4) MSMEs get Rs 9,000 Cr corpus for revamped credit guarantee scheme
Last year, Sitharaman had proposed revamping the credit guarantee scheme for MSMEs. She announced today that the revamped scheme will take effect from April 1, 2023 through infusion of Rs 9,000 crore in the corpus.
5) Presumptive taxation eligibility limits enhanced
The presumptive taxation limits for MSME and Professionals have raised to Rs.3 crore and Rs.75 lakh respectively. Earlier MSMEs with annual turnover up to Rs.2 crore and Professionals with income up to Rs.50 lakh were allowed to go for presumptive taxation if their total cash receipts were not more than 5% of the total receipts.
6) Rebate limit increased to 7 lakh in new tax regime
Nirmala Sitharaman, in the Union Budget has also tweaked the slabs to provide some relief to the middle class by announcing that no tax would be levied on annual income of up to Rs 7 lakh for earlier Rs 5 Lakh, under the new tax regime.
7) Number of slabs reduced, new tax rates announced
The FM in 2020, introduced the new personal income tax regime with 6 income slabs, starting from Rs 2.5 lakh. In this budget she has proposed to change the tax structure by reducing the number of slabs to 5 and increasing the tax exemption limit to Rs 3 lakh.
Tax slabs & rates for New Income Tax Regime
Income & Tax rate
Up to Rs 3 lakh- NIL
Rs 3 lakh to Rs 6 lakh- 5%
Rs 6 lakh to Rs 9 lakh- 10%
Rs 9 lakh to Rs 12 lakh 15%
Rs 12 lakh to Rs 15 lakh 20%
Above Rs 15 lakh- 30%
8) Expanding scope of DigiLocker for Fintech Sector
Fintech services in India have been facilitated by our digital public infrastructure including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. To enable more Fintech innovative services Nirmala Sitharaman announced to expand the government digital certificate depository Digilocker services for the sector. The move is likely to bring in better transparency in the current system.
9) Proposal for the salaried class, pensioners and Reduction In highest surcharge rate
In respect of the salaried class and the pensioners including family pensioners, the Finance Minister extended the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs. 15.5 lakh or more will thus stand to benefit by Rs.52,500.
In personal income tax space, another announcement was regarding the highest tax rate which is 42.74% and is among the highest in the world. The finance minister has proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime. This would result in reduction of the maximum tax rate to 39%.
10) Mahila Samman Bachat Scheme’ for Women
The Finance Minister announced Mahila Samman Bachat Patra- a one-time new small savings scheme – for a two-year period up to March 2025. This initiative will avail a deposit facility for a woman up to ₹two lakh for two-year period at a fixed interest rate of 7.5% with partial withdrawal option.