A Complete Overview of Union Budget 2023

The Union Budget, also known as the annual financial statement or annual budget, is a document delivered by India’s finance minister that outlines the government’s revenue and expenditure projections for the upcoming fiscal year. The budget is normally submitted to the Indian Parliament and details the government’s taxing, spending, and economic objectives. In addition, it provides forecasts for major economic indices including GDP and inflation. This year’s Union Budget 2023 is anticipated to increase economic growth, especially in light of the pandemic’s negative effects.

Our finance minister, Smt. Nirmala Sitharaman declared India’s economic outlook is stronger than it was in the years before the pandemic as she introduced the budget. The government has declared that it will prioritise industry and infrastructure while increasing welfare spending. Keep reading to find out the most important information regarding the Union Budget 2023.

What is the Union Budget 2023?

In accordance with Article 112 of the Indian Constitution, the annual Union Budget, sometimes referred to as the annual financial statement, is a disclosure of the anticipated sums of money that the government would receive and spend over the upcoming year.

In layman’s terms, the Union Budget of India is an annual report issued by the finance minister that describes how the country’s money will be spent and different policy changes.

Union Budget keeps track of the government’s finances from April 1 to March 31. The Union Budget is divided into the revenue budget and the capital budget.

Revenue Budget

The revenue budget for the government takes into account both the incoming revenues and outgoing expenditures. The two categories of revenue received are referred to as taxable income and non-tax revenue. The costs that are associated with keeping the operations of the government running and providing a variety of services to its citizens are referred to as revenue expenditures. A revenue deficit is created when a government’s spending on revenues is greater than what it takes in through taxes and other forms of revenue.

Capital Budget

The term capital Budget refers to the government’s total monetary outlay and incoming funds for physical infrastructure. Most of the government’s capital comes from loans from the public, other governments, and the Reserve Bank of India (RBI). Capital expenditure is the term used to describe the process of investing money into long-term assets such as buildings, machines, and infrastructure. When the government’s total expenditure exceeds its total revenue, a fiscal deficit is created.

Priorities of Budget 2023 – Saptrishi

1. Inclusive development

2. Ensuring green growth

3. Boosting the financial sector

4. Reaching the last mile connectivity

5. Capital investment

6. Unleashing the youth potential

7. Youth aspirations & employment

Key Highlights & Takeaways of Budget 2023

The Budget 2023–2024 places a lot of emphasis on improving infrastructure and the healthcare system. It also has provisions to support farmers and small enterprises. The budget also suggests tax breaks for private citizens and strategies for luring foreign investment.

1. For Startups

Tax holiday

In India, startups receive a “tax holiday” for the first three years following establishment. Up until recently, any startup that was formed before March 31, 2023, was eligible for this tax holiday benefit.

Implication:

• The Budget 2023 extended this deadline by one year, so a startup formed before March 31, 2024, can also enjoy the tax holiday benefits!

Set off and carry forward losses

Up until recently, entrepreneurs were permitted to carry forward and set off losses if they had occurred within the previous seven years of formation. Ten years have now passed after incorporation under the new Budget.

Implication:

• Startups are permitted to “carry forward and set off losses,” which allows losses from any source to be offset against profits from other sources and carried over to subsequent fiscal years.
• Losses can be offset against taxable income, lowering the total amount of tax that must be paid in the end and providing relief to the company.

2. In IT

Accessibility to data

• The Budget 2023 placed a strong emphasis on the value of data accessibility to encourage innovation in the IT sector at a much faster rate.
• The National Data Governance Policy, which was included in Budget 2023, will result in the creation of a sizable repository of Indian datasets.
• To promote innovation, the academic and startup ecosystem will have access to this data, which may come from public or private sources.
• The National Data Governance Policy also emphasises encouraging ownership, responsibility, and openness in the access to non-personal data and datasets.

3. For Businesses

COVID-19 relief

• MSMEs will receive a 95% refund of the forfeited sum connected to bid or security by the government and government undertakings in Budget 2023 if they were unable to execute contracts under COVID.
• Micro, Small, and Medium-Sized Businesses that were impacted by the epidemic would benefit from this.

Reform of the credit guarantee scheme

• The credit guarantee programme, which was created to give MSMEs collateral-free loans, is also being updated.
• The updated programme will lower the cost of credit to roughly 1% and offer collateral-free guaranteed lending of up to Rs 2 lakh crore.

4. For Digital India

• This new Budget established a Digilocker for MSMEs and large corporations dubbed the Entity Digilocker, a service that was previously exclusively available to retail clients.
• Continued funding for electronic payments and digital public infrastructure was also included in the budget. It was projected that in 2023, digital payment transactions would climb by 76%.

5. In Agriculture

• The importance of integrating technology into agriculture was a major theme of the Budget 2023.
• The agri-tech industry and the companies that surround it will benefit from the new digital public infrastructure.
• As a result, “comprehensive, farmer-centric solutions for crop planning, credit, insurance, crop estimating, and market intelligence” will be made possible.
• Additionally, a fund for agricultural companies in rural areas will be established as an accelerator.
• For buying wheat and rice, farmers will receive direct payments of Rs. 2.37 lakh crore. Starting with areas within 5 km of the Ganges River, the government will promote “Chemical-free Natural farming.” NABARD will fund the startup of agricultural and rural businesses with blended financing. “Kisan Drones” will be used to inspect crops, digitise land records, and spread nutrients and insecticides.

6. Taxes

Every year, the tax policy adjustments are the most anticipated portion of the budget, and this year was no exception: the finance minister unveiled some exciting revisions!

Presumed Taxation

• With the Budget 2023, micro, small, and medium-sized enterprises (MSMEs) with a turnover of up to Rs 3 crore and professionals with a turnover of up to Rs 75 lakh – with cash receipts of no more than 5% – can benefit from “presumptive taxation.”
• Presumptive taxation occurs when a taxpayer is excluded from keeping financial records. This assists small taxpayers who struggle to keep accurate books of accounts.

TDS Rate Chart for AY 2023–24

• The TDS rate on the taxable portion of EPF withdrawals was previously 30% but has now been reduced to 20%.
• TDS’s 10,000 rupees minimum level is no longer in effect.

7. Income Tax

• The main announcement in Budget 2023 was a change in the income tax rebate limit.
• Before, people who earned less than Rs 5 lakhs didn’t have to pay taxes. That amount has now been raised to Rs. 7 lakhs.
• Now, while filing tax returns, the new tax regime is selected by default.
• The updated tax slab for FY 2023–2024 is shown below.

The Income Tax Slab FY 2023-24

Other Key Highlights of Union Budget 2023 – Major Schemes and Specific Ministries

1. PM GatiShakti

Seven crucial areas are covered under the PM GatiShakti National Master Plan for economic development and seamless multimodal connectivity: roads, railroads, airports, ports, mass transit, waterways, and logistics infrastructure. These initiatives will follow the PM GatiShakti framework and be included in the National Infrastructure Pipeline.

2. Road travel  

With a budget of Rs 20,000 crore, the National Highways Network will be extended by 25,000 km in 2022–203. In 2022–2023, four Multimodal Logistics Park contracts will be granted through PPP.

3. Parvatmala

Eight ropeway projects, each 60 km long, will be awarded under the “Parvatmala” National Ropeways Development Program in 2022–2023.

4. Railways

“One Station, One Product” to promote regional commerce, In 2022–2023, 2,000 km of the railway network will be updated with Kavach, 400 new Vande Bharat trains will be produced, and 100 PM GatiShakti cargo facilities for multimodal logistics will be built over the next three years.

5. Project Ken Betwa

The Ken-Betwa Link Project, which would provide irrigation advantages to more than 9.08 lakh hectares of farmer land, has been allocated 1400 crore.

6. Education

The PM eVIDYA programme will grow to include 200 channels, virtual labs and skilling e-labs will be set up to encourage critical thinking, high-quality e-content will be made for Digital Teachers to deliver, and a Digital University will be set up to offer personalised, world-class education.

7. Health

A platform for the National Digital Health Ecosystem will be put in place, and a “National Tele Mental Health Programme” will be started to provide quality counselling and care for mental health. A network of 23 tele-mental health centres of excellence will be established, with NIMHANS as the lead centre and IIIT-Bangalore providing technology support.

8. Skill development

The DESH-Stack e-portal will promote start-ups that provide drone-related services like Drone Shakti and DrAAS and provide online training for skill development and enhancement.

9. Saksham Anganwadi

Through a variety of initiatives, women and children will receive integrated benefits, and 200,000 anganwadis will be upgraded to Saksham Anganwadis.

10. Har Ghar, Nal Se Jal

For the Har Ghar, Nal se Jal programme, which will deliver clean drinking water to 3.8 crore homes in 2022–2023, Rs. 60,000 crore has been allotted.

11. Housing for all

The PM Awas Yojana programme will spend Rs.48,000 crore to finish building 80 million homes by 2022–2023.

12. Prime Minister’s Development Initiative for North-East Region (PM-DevINE)

PM-DevINE is a new initiative for infrastructure and social development projects in the North-East, with an initial allocation of 1,500 crore rupees for youth and women’s livelihood activities.

13. Finance and e-Passport

75 districts’ worth of Scheduled Commercial Banks would bring 1.5 lakh post offices and 75 Digital Banking Units (DBUs) onto the main banking system.

There will be the introduction of new e-passports with cutting-edge technology and an embedded chip.

14. Digital Rupee

In 2022–2023, the Reserve Bank of India will start implementing the Digital Rupee.

15. Jewelry and gemstones

Customs duty on diamonds and gemstones was decreased to 5%, there was no duty on diamonds that were merely sawn, the framework for exports via e-commerce was simplified, and there was a greater tariff on imitation jewellery imports to deter discounted imports.

An Overview of Budget 2023

In the PM Modi-led government’s last full Union Budget before the country goes to the polls next year, FM Sitharaman has given some relief to the common man’s pocket. Thanks to the refund provided by Section 87A, persons with income up to Rs 5 lakh currently pay no income tax under either the old or new tax regimes. However, FM Sitharaman has suggested increasing the rebate maximum to Rs 7 lakh under the new tax regime.

Nevertheless, there was no change to the way capital gains taxes work, which was a key request from market participants and issuers of different financial instruments. The capital tax system, which is regarded as one of the most complex in the world, was not simplified.

Lastly, the national financial information registry will make it easier for more people to get credit and do other things that involve money. This, together with other recommendations on data stewardship, has the potential to significantly enhance the digital delivery of financial services.

FAQs

1. What is the new tax slab?  

Ans: The tax exemption threshold would be increased to Rs 3 lakh, and FM Sitharaman has also suggested decreasing the number of tax slabs in the new system from seven to six.

2. Who is qualified to file a tax return?

Ans: In India, income tax is due for everyone under the age of 60 who earns more than Rs 3 lakh.

3. What is an Income Tax Return (ITR) in India?

Ans: An individual in India is obligated to file an income tax return, which is abbreviated as an ITR, with the Income Tax Department of India. It includes details on the individual’s earnings and the yearly taxes owed.

4. How much money in India is exempt from taxes?

Ans: If your annual income is up to Rs. 7 lacs, you would not be subject to income tax under the new system.

5. Is the new income tax system set to be the default tax system?

Ans: Yes, the new income tax system is adopted as the standard tax system. Individuals will, however, have the choice to stick with the previous income tax system. The highest rate surcharge has been decreased by the government from the current 37 % to 25% under the new tax system.