In the 75th year of India’s
Independence, the World has recognized the Indian Economy as a ‘bright star’ as
the Economic Growth is estimated at 7 per cent, which is the highest among all
major economies, in spite of the massive global slowdown caused by COVID-19 and
Russia-Ukraine War. This was stated by Union Minister for Finance &
Corporate Affairs Smt. Nirmala Sitharaman, while presenting the Union Budget
2023-24 in Parliament today. She emphasized that Indian economy is on the right
track, and despite a time of challenges, heading towards a bright future.
PART-A
Smt. Sitharaman said that this
Budget hopes to build on the foundation laid in the previous Budget, and the
blueprint drawn for India@100, which envisions a prosperous and inclusive
India, where the fruits of development reach all regions and citizens,
especially our youth, women, farmers, OBCs, Scheduled Castes and Scheduled
Tribes.
Resilience amidst multiple
crises
The Finance Minister said that
India’s rising global profile is due to several accomplishments like unique
World Class Digital Public Infrastructure namely, Aadhaar, Co-Win and UPI;
COVID-19 vaccination drive in unparalleled scale and speed; proactive role in
frontier areas such as achieving the climate related goals, mission LiFE, and
National Hydrogen Mission.
She said that during the
Covid-19 pandemic, Government ensured that no one goes to bed hungry, with a
scheme to supply free food grains to over 80 Crore persons for 28 months.
The Minister added that continuing with Centre’s commitment to ensure food and
nutritional security, Government is implementing, from 1st January 2023, a
scheme to supply free food grain to all Antyodaya and priority households for
the next one year, under PM Garib Kalyan Anna Yojana (PMGKAY). The entire expenditure
of about Rs 2 lakh crore will be borne by the Central Government.
G20 Presidency: Steering the
global agenda through challenges
The Finance Minister pointed
out that in these times of global challenges; the G20 Presidency gives India a
unique opportunity to strengthen its role in the world economic order. With the
theme of ‘Vasudhaiva Kutumbakam’, India is steering an ambitious,
people-centric agenda to address global challenges, and to facilitate
sustainable economic development, she added.
Achievements since 2014:
Leaving no one behind
Smt. Sitharaman said that the
government’s efforts since 2014 have ensured for all citizens a better quality
of living and a life of dignity and the per capita income has more than doubled
to Rs 1.97 lakh. She said that in these nine 9 years, the Indian economy has
increased in size from being 10th to 5th largest in the world. Moreover, the
economy has become a lot more formalized as reflected in the EPFO membership,
more than doubling to 27 crore, and 7,400 crore digital payments of Rs 126 lakh
crore through UPI in 2022.
The Finance Minister pointed
out that the efficient implementation of many schemes, with universalisation of
targeted benefits, has resulted in inclusive development and listed some of the
schemes such as 11.7 crore household toilets under Swachh Bharat Mission, 9.6
crore LPG connections under Ujjawala, 220 crore Covid vaccinations of 102 crore
persons, 47.8 crore PM Jan Dhan Bank Accounts, Insurance cover for 44.6 crore
persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana, and Cash transfer of
Rs 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
Vision for Amrit Kaal –
an empowered and inclusive economy
The Finance Minister said that
our vision for the Amrit Kaal includes technology-driven and knowledge-based
economy with strong public finances, and a robust financial sector and to
achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas is essential. She
added that the economic agenda for achieving this vision focuses on three
things and those are facilitating ample opportunities for citizens, especially
the youth, to fulfill their aspirations, secondly, providing strong impetus to
growth and job creation and finally to strengthen macro-economic stability. She
added that to service these focus areas in our journey to India@100, the
following four opportunities can be transformative during Amrit Kaal-
- Economic
Empowerment of Women: Deendayal Antyodaya Yojana National Rural
Livelihood Mission has achieved remarkable success by mobilizing rural
women into 81 lakh Self Help Groups and we will enable these groups to
reach the next stage of economic empowerment through formation of large
producer enterprises or collectives with each having several thousand
members and managed professionally.
- PM VIshwakarma
KAushal Samman (PM VIKAS): For centuries, traditional artisans and
craftspeople, who work with their hands using tools, have brought renown
for India and they are generally referred to as Vishwakarma. The art and
handicraft created by them represents the true spirit of Atmanirbhar
Bharat.
The Finance Minister informed
that for the first time, a package of assistance for them has been
conceptualized and the new scheme will enable them to improve the quality,
scale and reach of their products, integrating them with the MSME value chain.
The components of the scheme will include not only financial support but also
access to advanced skill training, knowledge of modern digital techniques and
efficient green technologies, brand promotion, linkage with local and global
markets, digital payments, and social security. This will greatly benefit the
Scheduled Castes, Scheduled Tribes, OBCs, women and people belonging to the
weaker sections.
- Tourism: The
Finance Minister said that the country offers immense attraction for
domestic as well as foreign tourists, as there is a large potential to be
tapped in tourism. She added that the sector holds huge opportunities for
jobs and entrepreneurship for youth in particular and emphasized that
promotion of tourism will be taken up on mission mode, with active
participation of states, convergence of government programmes and
public-private partnerships.
- Green Growth: Dwelling on the subject
of Green Growth, the FM said that India is implementing many programmes
for green fuel, green energy, green farming, green mobility, green
buildings, and green equipment, and policies for efficient use of energy
across various economic sectors. These green growth efforts help in
reducing carbon intensity of the economy and provides for largescale green
job opportunities, she added.
Priorities of this Budget
Smt. Nirmala Sitharaman listed
seven priorities of the Union Budget and said that they complement each other
and act as the ‘Saptarishi’ guiding us through the Amrit Kaal. They are as
follows: 1) Inclusive Development 2) Reaching the Last Mile 3) Infrastructure
and Investment 4) Unleashing the Potential 5) Green Growth 6) Youth Power 7)
Financial Sector
Priority 1: Inclusive Development
The Government’s
philosophy of Sabka Saath Sabka Vikas has facilitated inclusive development
covering in specific, farmers, women, youth, OBCs, Scheduled Castes, Scheduled
Tribes, divyangjan and economically weaker sections, and overall priority for
the underprivileged (vanchiton ko variyata). There has also been a sustained
focus on Jammu & Kashmir, Ladakh and the North-East. This Budget builds on
those efforts.
Agriculture and Cooperation
Digital Public Infrastructure for Agriculture
The Finance Minister said that
the Digital Public infrastructure for agriculture will be built as an open
source, open standard and inter operable public good. She said, this will
enable inclusive, farmer-centric solutions through relevant information
services for crop planning and health, improved access to farm inputs, credit,
and insurance, help for crop estimation, market intelligence, and support for
growth of agri-tech industry and start-ups.
Agriculture Accelerator Fund
The FM announces that an
Agriculture Accelerator Fund will be set-up to encourage agri-startups by young
entrepreneurs in rural areas, which will aim at bringing innovative and
affordable solutions for challenges faced by farmers. It will also bring in modern
technologies to transform agricultural practices, increase productivity and
profitability.
Enhancing productivity of cotton crop
To enhance the productivity of
extra-long staple cotton, Government will adopt a cluster-based and value chain
approach through Public Private Partnerships (PPP). This will mean
collaboration between farmers, state and industry for input supplies, extension
services, and market linkages.
Atmanirbhar Horticulture Clean Plant Programme
Smt. Nirmala Sitharaman
announced that the Government will launch an Atmanirbhar Clean Plant Programme
to boost availability of disease-free, quality planting material for high value
horticultural crops at an outlay of Rs 2,200 crore.
Global Hub for Millets: ‘Shree Anna’
Smt. Sitharaman quoted Prime
Minister as saying, “India is at the forefront of popularizing Millets, whose
consumption furthers nutrition, food security and welfare of farmers”. She said
that India is the largest producer and second largest exporter of ‘Shree Anna’ in
the world as it grows several types of 'Shree Anna' such as jowar, ragi, bajra,
kuttu, ramdana, kangni, kutki, kodo, cheena, and sama.
She mentioned that these have
a number of health benefits, and have been an integral part of our food for
centuries and acknowledged with pride that the huge service done by small
farmers in contributing to the health of fellow citizens by growing these
‘Shree Anna’. She added that to make India a global hub for 'Shree Anna',
the Indian Institute of Millet Research, Hyderabad will be supported as the
Centre of Excellence for sharing best practices, research and technologies at
the international level.
Agriculture Credit
Dwelling on welfare measures
for farmers, the Finance Minister announced that the agriculture credit target
will be increased to Rs 20 lakh crore with focus on animal husbandry, dairy and
fisheries.
She informed that the
Government will launch a new sub-scheme of PM Matsya Sampada Yojana with
targeted investment of Rs 6,000 crore to further enable activities of
fishermen, fish vendors, and micro & small enterprises, improve value chain
efficiencies, and expand the market.
Cooperation
For farmers, especially
small and marginal farmers, and other marginalized sections, the government is
promoting cooperative-based economic development model. A new Ministry of
Cooperation was formed with a mandate to realize the vision of ‘Sahakar Se Samriddhi’.
To realise this vision, the government has already initiated computerization of
63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs
2,516 crore.
In consultation with all
stakeholders and states, model bye-laws for PACS were formulated enabling them
to become multipurpose PACS. A national cooperative database is being prepared
for country-wide mapping of cooperative societies.
Smt. Sitharaman said that
Government will implement a plan to set up massive decentralized storage
capacity, which will help farmers store their produce and realize remunerative
prices through sale at appropriate times. The government will also facilitate
setting up of a large number of multipurpose cooperative societies, primary
fishery societies and dairy cooperative societies in uncovered panchayats and
villages in the next 5 years.
Health, Education and Skilling
Medical & Nursing Colleges
The Finance Minister announced
that one hundred and fifty-seven new nursing colleges will be established in
co-location with the existing 157 medical colleges established since 2014. She
also informed that a Mission to eliminate Sickle Cell Anaemia by 2047 will be
launched, which will entail awareness creation, universal screening of 7 crore
people in the age group of 0-40 years in affected tribal areas, and counseling
through collaborative efforts of central ministries and state governments. On
Medical Research, she said that facilities in select ICMR Labs will be made
available for research by public and private medical college faculty and
private sector R&D teams for encouraging collaborative research and
innovation.
Dwelling on the subject of
Pharma Innovation, the Finance Minister informed that a new programme to
promote research and innovation in pharmaceuticals will be taken up through
centers of excellence. She said that the Government will also encourage
industry to invest in research and development in specific priority areas.
Teachers’ Training
Smt. Sitharaman said that
Teachers’ training will be re-envisioned through innovative pedagogy,
curriculum transaction, continuous professional development, dipstick surveys,
and ICT implementation. She added that the District Institutes of Education and
Training will be developed as vibrant institutes of excellence for this
purpose.
She also informed that a
National Digital Library for Children and Adolescents will be set-up for
facilitating availability of quality books across geographies, languages,
genres and levels, and device agnostic accessibility. States will be encouraged
to set up physical libraries for them at panchayat and ward levels and provide
infrastructure for accessing the National Digital Library resources.
Additionally, to build a
culture of reading, and to make up for pandemic-time learning loss, the
National Book Trust, Children’s Book Trust and other sources will be encouraged
to provide and replenish non-curricular titles in regional languages and
English to these physical libraries.
Priority 2: Reaching the Last Mile
The Finance Minister said that
Prime Minister Vajpayee’s government had formed the Ministry of Tribal Affairs
and the Department of Development of North-Eastern Region to provide a sharper
focus to the objective of ‘reaching the last mile’. She said that Modi
Government has formed the ministries of AYUSH, Fisheries, Animal Husbandry and
Dairying, Skill Development, Jal Shakti and Cooperation.
Aspirational Districts and Blocks Programme
Smt. Sitharaman informed that
building on the success of the Aspirational Districts Programme, the Government
has recently launched the Aspirational Blocks Programme covering 500 blocks for
saturation of essential government services across multiple domains such as
health, nutrition, education, agriculture, water resources, financial
inclusion, skill development, and basic infrastructure.
Pradhan Mantri PVTG Development Mission
The Finance Minister said that
to improve socio-economic conditions of the particularly vulnerable tribal
groups (PVTGs), Pradhan Mantri PVTG Development Mission will be launched. This
will saturate PVTG families and habitations with basic facilities such as safe
housing, clean drinking water and sanitation, improved access to education,
health and nutrition, road and telecom connectivity, and sustainable livelihood
opportunities. An amount of Rs 15,000 crore will be made available to
implement the Mission in the next three years under the Development Action Plan
for the Scheduled Tribes. Smt. Sitharaman announced that in the next
three years, centre will recruit 38,800 teachers and support staff for the 740
Eklavya Model Residential Schools, serving 3.5 lakh tribal students.
Water for Drought Prone Region
The Finance Minister said that
in the drought prone central region of Karnataka, central assistance of Rs
5,300 crore will be given to Upper Bhadra Project to provide sustainable micro
irrigation and filling up of surface tanks for drinking water.
PM Awas Yojana
In an important announcement,
the Finance Minister said that the outlay for PM Awas Yojana is being enhanced
by 66 per cent to over Rs 79,000 crore.
‘Bharat Shared
Repository of Inscriptions’ will be set up in a digital epigraphy museum, with
digitization of one lakh ancient inscriptions in the first stage.
Priority 3: Infrastructure & Investment
Smt. Sitharaman said,
investments in Infrastructure and productive capacity have a large multiplier
impact on growth and employment and in view of this capital investment outlay
is being increased steeply for the third year in a row by 33 per cent to Rs 10
lakh crore, which would be 3.3 per cent of GDP. She said that this will be
almost three times the outlay in 2019-20. The ‘Effective Capital Expenditure’
of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5 per cent of
GDP.
Support to State Governments for Capital Investment
The Finance Minister informed
that the Government has decided to continue the 50-year interest free loan to
state governments for one more year to spur investment in infrastructure and to
incentivize them for complementary policy actions, with a significantly
enhanced outlay of Rs 1.3 lakh crore.
Railways
The Finance Minister announced
that a capital outlay of Rs 2.40 lakh crore has been provided for the Railways,
which is the highest ever outlay and about 9 times the outlay made
in 2013- 14.
She also informed that one
hundred critical transport infrastructure projects, for last and first mile
connectivity for ports, coal, steel, fertilizer, and food grains sectors have
been identified and they will be taken up on priority with investment of Rs
75,000 crore, including Rs 15,000 crore from private sources.
Smt. Sitharaman said that
fifty additional airports, heliports, water aerodromes and advance landing
grounds will be revived for improving regional air connectivity.
The Finance Minister announced
that an Urban Infrastructure Development Fund (UIDF) will be established
through use of priority sector lending shortfall, which will be managed by the
National Housing Bank, and will be used by public agencies to create urban
infrastructure in Tier 2 and Tier 3 cities. She said that States will be
encouraged to leverage resources from the grants of the 15th Finance
Commission, as well as existing schemes, to adopt appropriate user charges
while accessing the UIDF.
Smt. Sitharaman said that
Government will make available Rs 10,000 crore per annum for this purpose.
Priority 4: Unleashing the Potential
The Finance Minister said that
for enhancing ease of doing business, more than 39,000 compliances have been
reduced and more than 3,400 legal provisions have been decriminalized. She
added that for furthering the trustbased governance, Government has introduced
the Jan Vishwas Bill to amend 42 Central Acts.
Centres of Excellence for Artificial Intelligence
The Finance Minister said that
for realizing the vision of “Make A-I in India and Make A-I work for India”,
three centers of excellence for Artificial Intelligence will be set-up in top
educational institutions. Leading industry players will partner in conducting
interdisciplinary research, develop cutting-edge applications and scalable
problem solutions in the areas of agriculture, health, and sustainable cities,
which will galvanize an effective A-I ecosystem and nurture quality human
resources in the field.
National Data Governance Policy.
The FM said that to
unleash innovation and research by start-ups and academia, a National Data
Governance Policy will be brought out, which will enable access to anonymized
data.
She also announced that An
Entity DigiLocker will be set up for use by MSMEs, large business and
charitable trusts for storing and sharing documents online securely, whenever
needed, with various authorities, regulators, banks and other business
entities.
On 5G Services, she announced
that one hundred labs for developing applications using 5G services will be set
up in engineering institutions to realize a new range of opportunities,
business models, and employment potential. The labs will cover, among others,
applications such as smart classrooms, precision farming, intelligent transport
systems, and health care applications.
Priority 5: Green Growth
Smt. Sitharaman said
that Prime Minister has given a vision for “LiFE”, or Lifestyle for
Environment, to spur a movement of environmentally conscious lifestyle. India
is moving forward firmly for the ‘panchamrit’ and net-zero carbon emission by
2070 to usher in green industrial and economic transition.
She said, this Budget builds
on the focus on green growth. The recently launched National Green Hydrogen
Mission, with an outlay of Rs 19,700 crores, will facilitate transition of the
economy to low carbon intensity, reduce dependence on fossil fuel imports, and
make the country assume technology and market leadership in this sunrise
sector. The target is to reach an annual production of 5 MMT by 2030.
The Budget also provides
Rs35,000 crore for priority capital investments towards energy transition and
net zero objectives, and energy security by Ministry of Petroleum & Natural
Gas.
The Finance Minister said that
to steer the economy on the sustainable development path, Battery Energy
Storage Systems with capacity of 4,000 MWH will be supported with Viability Gap
Funding.
She also informed that the
Inter-state transmission system for evacuation and grid integration of 13 GW
renewable energy from Ladakh will be constructed with investment of Rs
20,700 crore including central support of Rs 8,300 crore.
GOBARdhan scheme
Smt. Nirmala Sitharaman
announced that 500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing
Organic Bio-Agro Resources Dhan) scheme will be established for promoting
circular economy. These will include 200 compressed biogas (CBG) plants, including
75 plants in urban areas, and 300 community or cluster-based plants at total
investment of Rs 10,000 crore.
She said, in due course, a 5
per cent CBG mandate will be introduced for all organizations marketing natural
and bio gas and for collection of bio-mass and distribution of bio-manure,
appropriate fiscal support will be provided.
Bhartiya Prakritik Kheti Bio-Input Resource Centres
The Finance Minister announced
that over the next 3 years, the Centre will facilitate one crore farmers to
adopt natural farming. For this, 10,000 Bio-Input Resource Centres will be
set-up, creating a national-level distributed micro-fertilizer and pesticide
manufacturing network.
The Finance Minister said that
in furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, she
has allocated adequate funds to scrap old vehicles of the Central Government
and States will also be supported in replacing old vehicles and ambulances.
Priority 6: Youth Power
The Finance Minister said that
to empower the youth and help the ‘Amrit Peedhi’ realize their dreams,
Government has formulated the National Education Policy, focused on skilling,
adopted economic policies that facilitate job creation at scale, and have
supported business opportunities.
She also announced that
Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of
youth within the next three years. On-job training, industry partnership, and
alignment of courses with needs of industry will be emphasized. The scheme will
also cover new age courses for Industry 4.0 like coding, AI, robotics,
mechatronics, IOT, 3D printing, drones, and soft skills.
She also announced that to
skill youth for international opportunities, 30 Skill India International
Centres will be set up across different States.
National Apprenticeship Promotion Scheme
Smt. Nirmala Sitharaman said
that to provide stipend support to 47 lakh youth in three years, Direct Benefit
Transfer under a pan-India National Apprenticeship Promotion Scheme will be rolled
out.
Unity Mall
The FM said that States will
be encouraged to set up a Unity Mall in their state capital or most prominent
tourism centre or the financial capital for promotion and sale of their own
ODOPs (one district, one product), GI products and other handicraft products,
and for providing space for such products of all other States.
Priority 7: Financial Sector
Credit Guarantee for MSMEs
The Finance Minster said that
last year, she proposed revamping of the credit guarantee scheme for MSMEs and
announced happily that the revamped scheme will take effect from 1st
April 2023 through infusion of Rs 9,000 crore in the corpus. This will
enable additional collateral-free guaranteed credit of Rs 2 lakh crore.
Further, the cost of the credit will be reduced by about 1 per cent.
Smt. Sitharaman said that a
National Financial Information Registry will be set up to serve as the central
repository of financial and ancillary information. This will facilitate
efficient flow of credit, promote financial inclusion, and foster financial
stability. A new legislative framework will govern this credit public
infrastructure, and it will be designed in consultation with the RBI.
She also announced that a
Central Processing Centre will be setup for faster response to companies
through centralized handling of various forms filed with field offices under
the Companies Act.
For commemorating Azadi Ka
Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings
Certificate, will be made available for a two-year period up to March 2025.
This will offer deposit facility upto Rs 2 lakh in the name of women or girls
for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial
withdrawal option.
Senior Citizens
The Finance Minister announced
that the maximum deposit limit for Senior Citizen Savings Scheme will be
enhanced from Rs 15 lakh to Rs 30 lakh.
Also, the maximum deposit
limit for Monthly Income Account Scheme will be enhanced from Rs 4.5 lakh to Rs
9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint
account.
Fiscal Management
Fifty-year interest free loan to States
Smt. Nirmala Sitharaman said
that the entire fifty-year loan to states has to be spent on capital
expenditure within 2023-24. Most of this will be at the discretion of states,
but a part will be conditional on states increasing their actual capital
expenditure. She said, parts of the outlay will also be linked to, or allocated
for, the following purposes: like Scrapping old government vehicles, Urban
planning reforms and actions, Financing reforms in urban local bodies to make
them, creditworthy for municipal bonds, Housing for police personnel above or
as part of police stations, Constructing Unity Malls, Children and adolescents’
libraries and digital infrastructure and State share of capital
expenditure of central schemes.
The Revised Estimate of the
total receipts other than borrowings is Rs 24.3 lakh crore, of which the net
tax receipts are Rs 20.9 lakh crore. The Revised Estimate of the total
expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs
7.3 lakh crore. Similarly, the Revised Estimate of the fiscal deficit is 6.4
per cent of GDP, adhering to the Budget Estimate.
Budget Estimates 2023-24
Concluding the Part-One of the
General Budget, Ms Nirmala Sitharaman said that the total receipts other
than borrowings and the total expenditure are estimated at Rs 27.2 lakh
crore and Rs 45 lakh crore respectively. The net tax receipts are
estimated at Rs 23.3 lakh crore.
The fiscal deficit is estimated to be 5.9 per
cent of GDP.
She said that in her Budget
Speech for 2021-22, she had announced that Government plans to continue the
path of fiscal consolidation, reaching a fiscal deficit below 4.5 per cent by
2025-26 with a fairly steady decline over the period. She said that the Government
has adhered to this path, and reiterated to bring the fiscal deficit below 4.5
per cent of GDP by 2025-26.
Smt. Sitharaman said, to
finance the fiscal deficit in 2023-24, the net market borrowings from dated
securities are estimated at Rs11.8 lakh crore. The balance financing is
expected to come from small savings and other sources. The gross market
borrowings are estimated at Rs 15.4 lakh crore.
Part B
Smt Nirmala Sitharaman
provides major relief in the personal income tax. The indirect tax proposals
contained in the budget aim to promote exports enhance domestic value addition,
encourage green energy and mobility.
Personal Income Tax
There are five major
announcements relating to the personal income tax. The rebate limit in the new
tax regime has been increased to ₹ 7 lakh, meaning that peons in the new tax
regime with income upto ₹ 7 lakh will not have to pay any tax. The tax
structure in the new personal tax regime has been changed by reducing number of
slabs to five and increasing the tax exemption limit to ₹ 3 lakh. This will
provide major relief to all tax payers in the new regime.
The benefit of standard
deduction has been extended to the salaried class and the pensioners including
family pensioner under the new tax regime. Salaried individual will get
standard deduction of ₹ 50,000 and pensioner ₹ 15,000 as per the proposal. Each
salaried person with an income of ₹ 15.5 lakh or more will thus gain ₹ 52,500,
from the above proposals.
The highest surcharge rate in
personal income tax has been reduced from 37% to 25% in the new tax regime for
income above ₹2 crore. This would result in maximum tax rate of personal income
tax come down to 39% which was earlier 42.74%.
The limit of tax exemption on
leave encashment on retirement of non-government salaried employees has been
increased from ₹3 lakh to ₹25 lakh.
The new income tax regime has
been made the default tax regime. However, the citizens will continue to have
the option to avail the benefit of the old tax regime.
Indirect Tax Proposals
The indirect tax proposals
announced in the budget by the Union Minister for Finance & Corporate
Affairs, Smt Nirmala Sitharaman emphasized on simplification of tax structure
with fewer tax rates so as to help in reducing compliance burden and improving
tax administration. The number of basic customs duty rates on goods, other than
textiles and agriculture, has been reduced from 21 to 13. There are minor
changes in the basic customs duties, cesses and surcharges on items including
toys, bicycles, automobiles and naphtha.
To avoid cascading of taxes on
blended compressed natural gas, excise duty on GST-paid compressed bio-gas
contained in it has been exempted from excise duty. Customs duty exemption has
been extended to import of capital goods and machinery required for manufacture
of lithium-ion cells for batteries used in electric vehicles.
To further deepen domestic
value addition in manufacture of mobile phones, the Finance Minister announced
relief in customs duty on import of certain parts and inputs like camera lens.
The concessional duty on lithium-ion cells for batteries will continue for
another year. Basic customs duty on parts of open cells of TV panels has been
reduced to 2.5%. The Budget also proposes changes in the basic customs duty to
rectify inversion of duty structure and encourage manufacturing of electrical
kitchen chimneys.
Denatured ethyl alcohol has
been exempted from basic customs duty. Basic customs duty has also been reduced
on acid grade fluorspar and crude glycerin. Duty is being reduced on key inputs
for domestic manufacture of shrimp feed. Basic customs duty on seeds used in
the manufacture of Lab Grown Diamonds has also been reduced. The import duty on
silver dore, bars and articles has been increased to align them with that on
gold and platinum. The basic customs duty rate on compounded rubber has been
increased. National Calamity Contingent Duty on specified cigarettes has been
revised upwards by about 16%. The basic customs duty on crude glycerin for use
in manufacture of epicholorhydrin is proposed to be reduced from 7.5% to 2.5%.
Common IT Return Form
The Union Budget also proposes
to roll out a next-generation common IT return form for tax payer convenience.
It also stipulates a plan to strengthen the grievance redressal mechanism for
direct taxes. The Finance Minister also announced deployment of about 100 Joint
Commissioners for disposals of small appeals in direct tax matters. She also
said that the department will be more selective in taking up cases for scrutiny
of returns already received this year.
Better targeting of tax
concessions
For better targeting of tax
concessions and exemptions, deduction from capital gains on investment in
residential house has been capped at ₹ 10 crore. Income tax exemption from
proceeds of insurance policies with very high value will also have limit. There
are a number of proposals relating to rationalization and simplification of
direct taxes in the Union Budget.
Other major proposals in the
Budget relate to Extension of period of tax benefits to funds relocating to
IFSC, GIFT City till 31.03.2025; Decriminalisation under section 276A of the
Income Tax Act; Allowing carry forward of losses on strategic disinvestment
including that of IDBI Bank; and Providing EEE status to Agniveer Fund.
Proposals relating to MSMEs
Describing MSMEs as growth
engines of our economy, the Budget proposes enhanced limits for micro
enterprises and certain professionals for availing the benefit of presumptive
taxation. To support MSMEs in timely receipt of payments, the Budget allows
deduction for expenditure incurred on payments made to them only when payment
is actually made.
Cooperation
The Budget has a slew of
proposals for the cooperative sector. New cooperatives that commence
manufacturing activities till 31st March next year shall get
the benefit of a lower tax rate of 15%. The Budget provides an opportunity to
sugar cooperatives to claim payments made to sugarcane farmers for the period
prior to assessment year 2016-17 as expenditure. A higher limit of ₹ 2 lakh per
member has been provided for cash deposits to and loans in cash by Primary
Agricultural Cooperative Societies and Primary Cooperative Agriculture and
Rural Development Banks. The Budget proposes a higher limit of ₹ 3 crore for
TDS on cash withdrawal for cooperative societies.
Start-ups
The Budget proposes to extend
the date of incorporation for income tax benefits to start-ups from 31.03.2023
to 31.03.2024. It also provides the benefit of carry forward of losses on
change of shareholding of start-ups from 7 years of incorporation to 10 years.
Amendments in CGST Act
The Budget provides for
amending the CGST Act so as to raise the minimum threshold of tax amount for
launching prosecution under GST from ₹ 1 crore to ₹ 2 crore, except for the
offence of issuance of invoices without supply of goods and services or both.
The compounding amount will be reduced from the present range of 50 to 150% of
tax amount to the range of 25 to 100%. It will also decriminalize certain
clauses of the Act like obstruction and preventing of any officer from
discharge of his duties, deliberate tempering of evidence or failure to supply
the information.
Implications of tax changes
Announcing the changes in the direct and indirect taxes, the Finance Minister said that revenue of about ₹ 38,000 crore will be foregone as a result of these proposals, while revenue of about ₹3,000 crore will be additionally mobilised. She said thus the total revenue foregone is about ₹35,000 crore annually on account of these proposals.
