A BRIEF ON BUDGET 2023

The union budget is the annual budget of India. It is presented every year on first February by the finance minister of India. The union budget is also termed as annual financial statement. 

This year that is on february 1st, the finance minister of India has unveiled the budget 2023, where the citizens anticipated that the budget’s populist initiatives as well as those that would help India reach its objective of a $5 trillion GDP were anticipated by the public. It is no longer a grandiose ideal but an actionable strategy that is prepared for deployment thanks to increased Capex, infrastructural improvements, and incentives for important industries.

This years budget seeks to resolve current issues and strengthen the country for the ensuing decades. Numerous initiatives were added to increase economic consumption, reduce compliance load, aid MSMEs and the middle class, and streamline and simplify the tax system.

The union budget 2023, highlights the topic “Vision for Amrit Kaal” underneath, the major subjects will be:

1. Opportunities for citizens with major focus on youth.
2. Growth and job creation.
3. Strong and stable macro economic environment. 

The priorities of the budget 2023 will be: Inclusive development, reaching the last mile, youth power, financial sector, green growth, unleashing the potential, and infrastructure and investment. 

BUDEGT 2023 HIGHLIGHTS

Inclusive development

The government majorly focused on “sabka saath sabka vikaas” which has benefitted various sections of society. The government has worked on:

• Establishing 9 crore drinking water connections to rural houses
• Transfer of cash of 2.2 lakh crore over 11.4 crore farmers under PM-KISAN
• Establishment of 47.8 crores PM Jan Dhan bank Accounts.
• Insurance cover for 44.6 crore persons under PMSBY and PMJJY 
• Construction of 11.7crore household toilets under SBM.
• 9.6 crore LPG connections under Ujjawala 
• 220 crore vaccinations of 102 cr persons. 

REACHING THE LAST MILESTONE

• The government established the Aspirational District programme, building on its success.
• proposed an expenditure of Rs 15,000 crores for the recently launched Pradhan Mantri PVTG (Primitive Vulnerable Tribal Group) over the following three years to ameliorate the socioeconomic situations of the vulnerable tribal communities.
• The PM Awaas Yojana budget was increased by 66% to more over Rs 79,000 crores.
• For the 740 Eklavya Model Residential Schools, which will serve 3.5 lakh tribal students over the next three years, the centre expects to hire 38,800 teachers and support personnel.

UNLEASHING THE POTENTIAL

Vivad se Vishwas I: The government and its undertakings will return 95% of the forfeited amount due to bid or performance security if MSMEs failed to execute their contracts during the Covid period.

The KYC procedure will be simplified, and PAN cards would be used as a single form of identification.

The introduction of a national data governance policy will give startups, academic institutions, and others access to anonymised data for research and innovation.

34,000 rules have been decriminalised, and 39,000 violations have been decreased in order to make doing business in India easier.

To realise the goal of “Make AI in India and Make AI work for India,” three centres of excellence for artificial intelligence (AI) will be established in premier educational institutions.

The requirement to file the same information with many government entities would be eliminated by a unified filing method. The information can now be willingly shared with other governmental organisations via a shared site.

GREEN GROWTH

 The major subject of this years budget is to include “Green Growth” where the government aimed to achieve the target of net zero carbon emission in India by the year 2070. The major announcements are:

• Green hydrogen: Awarded Rs 19,700 crore for the National Green Hydrogen Mission, which will support a transition to low carbon intensity in the economy, reduce dependency on fossil fuel imports, and establish the nation as a technology and market leader in this expanding industry.
• Energy transmission: It is proposed to invest a total of Rs 20,700 crore in a transmission infrastructure for 13 GW of renewable energy from Ladakh, including Rs 8,300 crore in central support.
• Green credit programme: The Environment Protection Act was amended to include a green credit scheme to promote ecologically responsible conduct.
• Vehicle replacement: In addition to providing assistance to states in replacing their outdated vehicles and state ambulances, money have been allotted for the scrapping of old vehicles owned by the federal government.
• Energy transition: Rs 35,000 crores were allotted for significant capital expenditures in order to achieve energy transition, hit net zero targets, and improve energy security.
• Battery storage: 4,000 MWh of battery energy storage systems now have access to viability gap funding.

Infrastructure and investment

• To reach Rs 10 lakh crore, proposed capital expenditure has been increased by 33%.
• There will be a 1.3 lakh crore outflow as a result of extending the 50-year interest-free loan to state governments for another year.
• 2.4 lakh crore in planned expenditures for the railways
• To improve regional aviation connectivity, 50 airports, heliports, water aerodromes, and advanced landing fields will be renovated.
• To build urban infrastructure in Tier 2 and Tier 3 cities, the Urban Infrastructure Development Fund (UIDF) will be established with an annual investment of Rs 10,000 crore.

YOUTH POWER

• To provide thousands of young people with modern training, the PM Kaushal Vikas Yojana 4.0 will be introduced.
• Over the next three years, the National Apprenticeship Promotion Scheme would use Direct Benefit Transfer to pay stipends to 47 lakh young people (DBT).

FINANCIAL SECTOR

• With an investment of Rs 9,000 crore, revamped credit guarantee schemes for MSMEs would be put into place beginning in 2023. This will result in an additional Rs 2 lakh crore of collateral-free guaranteed loans. Additionally, the cost of the credit will be almost 1% lower.
• Government will implement a unified IT system for SEZ authorities, IFSCA, GSTN, SEBI, RBI, and IRDAI registration and approval in order to enhance business operations in GIFT IFSC.
• A unified processing centre will be set up to handle several forms related to the Companies Act, giving firms quicker results.
• To assist investors in recovering unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority, an integrated IT platform will be built (IEPFA).
• A one-time deposit programme for women called the Mahila Sanman Savings Certificate has been created. The highest deposit allowed is Rs. 2 lakh, and the maximum term is two years. This programme will earn a fixed interest rate of 7.5 percent and is valid through March 2025.
• The maximum investment limit for the Senior Citizen Savings Scheme (SCSS) has increased from Rs. 15 lakh to Rs. 30 lakh, with an interest rate of 8% for the quarter ending March 31, 2023.

DIRECT TAX

The default tax system is now the new one. To make the new tax system more appealing, the administration has implemented 5 crucial measures. The old tax system is still an option for taxpayers.

New slab rates as per the union budget 2023

Important notes:

• Under the new tax system, a tax credit of Rs 7 lakhs has been added to income. As a result, under the new tax system, you are not required to pay taxes if your taxable income is less than 7 lakhs.
• Under the new tax law, the standard deduction of Rs 52,500 has been added for salaried classes with more than Rs 15.5 lakh in taxable income.
• For those making more than Rs 5 crore, the highest surcharge under the new tax system has been decreased from 37% to 25%. Their tax rate is reduced as a result from 42.74% to 39%.

Presumptive taxation policy for f/y 2023-2024

AMMENDMENT FOR CO-OPERATIVE SOCIETIES

• New manufacturing initiatives: The government has given new cooperatives that start production by March 31, 2024, the benefit of a 15% tax rate discount.
• Sugar cooperatives: You can now claim any expenses that were previously forbidden to sugar cooperatives by submitting an application to the Assessing Officer.
• Section 194N: For cooperative organisations, the TDS ceiling on cash withdrawals has been raised to Rs. 3 crores.
• Cash deposit cap: The cap on cash deposits and loans made by Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) and Primary Agricultural Co-operative Societies (PACS) has been raised to a maximum of 200,000 per member.

OTHER UPDATES

• For non-government employees, the exemption level for leave encashment has been raised from Rs 3 lakh to Rs 25 lakh. As a result, under Section 10 at the time of retirement, leave encashment up to Rs. 25 lakhs for a maximum of 10 months is tax-free (10AA).
• TDS on EPF Withdrawal: On taxable EPF withdrawals, TDS rate was cut from 30% to 20%.
• Payment-based deductions: Payments to MSME are only permitted as expenses when they are actually made. By doing this, “payments to MSME” fall under Section 43B’s jurisdiction.
• No Penalty: Under Section 269SS or 269ST, no penalty would apply when a primary agricultural credit society, a primary co-operative agricultural and rural development bank, accepted or repaid a loan to its members, or vice versa.
• Limit on Capital Gains Exemption: The Sections 54 to 54F capital gains tax exemption is capped at Rs. 10 crores. There was no threshold earlier.

UPDATES ON INDIRECT TAXES

CHANGES IN CUSTOM DUTY

Following are the changes in the custom duty:

•  The National Calamity Contingent Duty (NCCD) was raised on a certain brand of cigarettes.
• To match the customs charge on gold and platinum, the importation of silver dore, bars, and other items has increased. Additionally, there are higher taxes on jewellery made of precious metals including gold, silver, and platinum.
• Extensions are given to the BCD exemptions for ferrous scrap, nickel cathode, and raw materials used to make CRGO steel.
• The basic customs charge on seeds used to produce lab-grown diamonds has been decreased by FM (LGDs).
• The fundamental customs tax on electric kitchen chimneys has gone raised.
• To promote domestic television production, FM decreased the basic customs tariff on components of open TV panel cells.
• The import of capital goods and equipment required to produce lithium-ion cells for electric vehicle batteries will continue to be exempt from customs duties.
• Additionally, the excise charge on compressed biogas that has already been mixed and paid for with GST is exempt.
• On some imported products, including toys, bicycles, cars, and naphtha, minor adjustments are made to the basic customs duties, cesses, and surcharges.

CHANGES IN GST

• A taxpayer may choose to participate in the composition system under the modified Section 10 even if they are selling items through e-commerce companies where TCS is collected under Section 52.
• It is now required by Section 16 that recipients taxpayers pay interest calculated in accordance with Section 50 on amounts they fail to pay to their suppliers, including GST, within 180 days of the invoice’s issue date.
• A restriction on filing GSTR-1 (return for outbound supplies), GSTR-3B (summary returns), GSTR-9 (annual returns), and GSTR-8 (e-commerce operator) for a tax period is imposed by amending Sections 37, 39, 44, and 52.
• E-commerce operators that let an unregistered person to offer goods or services or both through them would be subject to a fine of Rs. 10,000 or an amount equal to the amount of tax involved, whichever is larger. This does not apply if the unregistered individual is exempt from GST registration.
• Permit any registered person who is not qualified to do so from making interstate supplies of goods or services through them.
• Don’t provide accurate information in the GSTR-8 about any sales of products made through them by a person who is exempt from registering for GST.