Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman announced the official budget for 2023 on 1st February. The finance minister highlighted that the Indian economy has increased in size in the last 9 years from being the 10th largest to being the fifth largest economy in the world.
Budget 2023 adopts 7 Priorities that will act as Saptarshis:
- Inclusive development
- Reaching the last mile
- Infrastructure & investment
- Unleashing potential
- Green growth
- Youth Power
- Financial Sector
There were several expectations from this year’s union budget, let us read more about the Budget 2023 key highlights in this article.
Union Budget 2023: Key Highlights
Income Tax Slabs
- The limit of Rs. 3 lakhs for tax exemption on Leave Encashment limit has been raised to Rs. 25 lakhs. The new income tax regime will now be the default tax regime however, citizens will continue to have the option to avail the benefits of the old tax regime.
- The tax structure in this regime will now have 5 slabs and the tax exemption limit has been increased to 3 lakhs.
- For salaried class and pensioners including family pensioners: Benefit of Standard deduction to the new tax regime Each salaried person with an income of Rs. 15.5 lakhs or more to benefit by Rs. 52,500.
- Currently, those with an income of Rs 5 lakhs do not pay any income tax: The rebate limit has been increased to Rs 7 lakhs in the new tax regime.
Business/ Finance and MSME Sector
- To enable more fintech services, scope of documents available on Digi Locker for individuals to be expanded.
- An entity DigiLocker will be set up for use by MSMEs, large businesses and charitable trusts for securely storing and sharing documents online.
- Businesses will be required to have Permanent Account Number (PAN) to be used as a common identifier of all digital systems of specified govt. agencies, this will bring Ease of Doing Business.
- MSMEs would be supported in cases of failure to complete contracts during the COVID term by the government and government undertakings returning 95% of the forfeited cash related to bid or performance security to them.
- National Data Governance Policy to be brought out to enable access to anonymized data.
- KYC process to be simplified by adopting a risk-based instead of one size fits all approach. Fin regulators to be encouraged to adopt KYC system fitting the needs of Digital India.
- One-stop solution for reconciliation and updating of Identity and Addresses of individuals, maintained by various govt. entities, to be set up using DigiLocker services and Aadhaar as foundational identities.
- More than 3,400 legal provisions have been decriminalised, and more than 39,000 compliances have been reduced in order to improve the ease of doing business.
- In order to amend 42 central acts and unleash the potential of our economy, the Jan Vishwas Bill has been introduced.
PM Garib Anna Yojana
The central government will bear Rs. 2 lakh crore for expenditure under PM Garib Anna Yojana for providing grains and basic food requirements of the needy.
Mangrove Initiative for Shoreline Habitats and Tangible Incomes (MISHTI)
Mangrove Initative for Shoreline Habitats and Tangible Incomes (MISHTI) would be implemented to plant mangroves along the shoreline wherever it is viable through convergence with MNREGA and other sources, building on India’s success in afforestation.
- 10,000 bio input resource centres would be established to support 1 crore farmers in adopting natural farming over the next three years, resulting in the development of a national-level distributed micro fertilizers and pesticide manufacturing network.
- To encourage states and UTs to create alternative fertilizers and use chemical fertilizers in a balanced manner, the PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth would be introduced.
- 500 new Waste to Wealth Plants under the GOBARDAN scheme to be established for promoting circular economy, at a total investment of Rs. 10000 crores.
- An Atmanirbhar Clean Plant Program will be launched with an outlay of Rs. 2,200 crore to boost availability of disease-free, quality planting material for high-value horticultural crops.
Green Economy Initiatives
- With a budget of Rs. 19,700 crores, the National Green Hydrogen Mission will aid in the transition to a low-carbon economy. By 2030, it is intended to produce 5 MMT annually.
- A vision for a sustainable way of life has been provided by the PM. India is making steady progress toward the “panchamrat” goal of having no net carbon emissions by 2070. This budget continues to emphasise green growth.
- To ensure effective administration of justice, Phase 3 of the e-courts project would be launched with an investment of Rs. 7000 crores.
- In order to resolve contractual disputes involving the government and government undertakings where an arbitral award is being challenged in court, a voluntary settlement scheme with standardised terms will be implemented. The terms of the settlement will be graded according to the level of pendency.
Artificial Intelligence and New Technology Enhancements
- Three Centers of Excellence for Artificial Intelligence will be established in top educational institutions to realise the goals of “Make AI in India” and “Make AI Work for India.” Top business players will collaborate to conduct research and create applications.
- 100 labs for developing applications using 5G services to be set up in engineering institutions, to realize new range of opportunities, business models and employment potential.
- Kumar Mantri Pradhan The Vikas Yojana 4.0 will be introduced to train lakhs ofyouth in the next three years; it will stress on-the-job training, industry partnerships, course alignment with industry needs, and new age courses like coding and robotics.
- To prepare young people for opportunities abroad, 30 Skill India International Centers will be opened in various states, and the Unified Skill India Digital Platform would be used to further develop the digital skilling ecosystem.
Union Budget 2023: Expectations
Union Budget 2023: Amnesty Scheme for Customs
In order to give taxpayers an opportunity to settle old complaints, the government has previously established amnesty schemes for central excise and service tax disputes (Sabka Vishwas) and income tax disputes (Vivad se Vishwas).
Given that there are legacy conflicts in the area of customs as well, the government ought to think about implementing a one-time amnesty program for customs to put an end to prolonged disputes.
You may want to read about GST Amnesty Scheme
Union Budget 2023: Vivad se Vishwas Scheme to Reduce Litigation
The government is expected to implement the “Vivad se Vishwas Scheme” in order to reduce general litigation and tax litigation burden in India. It will also aid in revenue collection in the next fiscal, as per the sources. Taxpayers who are involved in legal disputes and appeals may be required to pay the disputed sum plus a 10–20% penalty in order to resolve the issues, sources suggest.
You may want to read more about: 5 Ways to Handle Litigation under GST
Union Budget 2023: Tax Breaks for the Farm Sector
The farming and agricultural sector is one of the major sectors where attention is needed. The government is expected to make some announcements regarding the farming sector in this budget. In order to balance losses from foreign threats, the agricultural sector anticipates tax cuts and financial incentives, such as subsidized loan facilities and interest rate subvention to Agri-Tech businesses.
Union Budget 2023: Insurance Sector
Many things are anticipated from the approaching Budget 2023 from the perspective of insurance and health care sector. The majority of the Section 80C limit is used by numerous other financial products, including insurance, equity-linked savings plans, and public provident funds (PPF). Insurance, particularly term insurance, deserves its own section. Term insurance plans should be promoted if the prevalence of life insurance (plans) in India is to be increased.
GST Exemption for Insurance Policies and Health care
To encourage consumers to protect themselves with insurance coverage, the government must consistently support the insurance business. There should be a GST exemption or decreased GST slab in light of the rising popularity of life insurance policies in order to better meet consumer demand.
Similarly, Covid helped everyone realize that there needs to be a drop in the GST rate and tax exemptions because our nation does not have appropriate health care coverage. The insurance sector is aware that consumers purchase life and health insurance in order to reduce their tax burden, thus a greater tax deduction threshold will only increase the uptake of health and life insurance.
Union Budget 2023: Lower Tax Slabs for Home Loan Interest Rates
It is crucial to raise the tax benefits for home and mortgage loans as part of measures to make housing more generally affordable for salaried individuals. Also, interest rates are touching the roofs! It is significant to lower the interest rates on home loans.
Union Budget 2023: Space Sector
A space-based production linked incentive (PLI) program for startups in the space technology industry is expected by the private space sector as a way to support domestic manufacturing and promote capability development in the nation. The industry asks the government to support the businesses and organizations in the space sector financially through loans, grants, and tax advantages.
Access to funding is a problem for the majority of India’s entrepreneurs in the space technology sector. According to a survey published by EY last year, India’s space industry was estimated to be worth USD 9.6 billion in 2020 and would reach USD 12.8 billion by 2025.
Union Budget 2023: GST Tribunal
There could be a discussion in the budget 2023 around the setting up of GST Tribunal. It has been now 5 years and the non-availability of the GST Tribunal has increased the workload of High Courts. GST Tribunal remedy available to taxpayers.