Highlights of the Indian Union Budget 2023

Highlights of the Union Budget 2023:

Priorities of the Union Budget 2023:

• Inclusive development
• Reaching the last mile
• Infra & investment
• Unleashing the potential
• Green growth
• Youth power
• Financial sector

Introduction to the Union Budget 2023:

Union budget focuses on ample opportunities for youth, robust focus on economic growth, job creation and stabilising the macro economy. India’s growth for the current year is expected at 7% in spite of a slowdown in the economy due to the pandemic and the Russia-Ukraine war. The revised fiscal deficit is at 6.4% of GDP which is fixed at 5.9% for 2023-24. The intention is to bring down the fiscal deficit below 4.5% of GDP by 2025-26.

Focus on Rural Development:

• The centre will spend INR 2 lakh cr on free food grains for all priority households under PM Garib Kalyan Yojana
• Also, the Centre will provide free food grains to all antyodaya and priority households until December 2023.

Focus on Agriculture Development:

• Digital infrastructure and an Agriculture accelerator fund is allocated to encourage agri-tech start-ups by young entrepreneurs in rural areas
• There is an increased agri credit target to Rs 20 lakh crore for 2023-24

Focus on Infrastructure:

• Digital public infrastructure for agriculture to be built to enable farmer-centric solutions for support and growth of agri-tech industry and start-ups
• Critical infrastructure projects to be undertaken for improving supply chain logistics of fertilisers and food grains
• Decentralised storage capacity is to be set up to enable farmers to realize sales in a timely manner
• Multipurpose cooperative societies, primary fishery societies and dairy cooperative societies are to be set up in the next five years
• 50 additional airports, heliports, water aerodromes, and advanced landing zones to be revitalised.
• 100 critical transport infra projects for steel, ports, fertiliser, coal, and foodgrain sectors have been identified with an investment of Rs75,000 crore including Rs 15,000 crore from private sources
• The outlay for PM Awaas Yojana enhanced 66% to over Rs 79,000 crore
• Rs 2.40 lakh crore has been provided for the Indian Railways which is 9 times the outlay made in 2013-14
• 50-year interest-free loans to state governments for one more year to aid infrastructure investment with an outlay of Rs 1.3 lakh crore

Focus on Healthcare and Pharma:

• A mission to eliminate sickle cell anaemia by 2047 will be launched by the government. This mission will include a universal screening of 7 crore people in the age group of 0-40 years in tribal areas and collaborations between central institutions and state governments
• The proposed “Centres of Excellence for Artificial Intelligence” will include health as a key area of inter-disciplinary research and for developing scalable solutions. 100 labs for developing apps using 5G services will be set up in engineering institutions
• The budget also gave importance to medical research and innovation in the pharma sector
  • ICMR labs will be made available to public and private medical college faculties and private sector R&D teams to facilitate collaborative research
  • A new programme to promote research and innovation in pharmaceuticals through centres of excellence has been planned

Focus on Education:

• Proposal to set up Eklavya Modern Schools in the next three years
• Dedicated multidisciplinary courses for medical devices will be provided to ensure skilled manpower for futuristic technologies and high-end manufacturing.
• 157 new nursing colleges will be established in colocation with the existing 157 medical colleges established since 2014
• Government proposes to set up a national digital library for children and adolescents to make up for the learning loss during the pandemic
• Three centres of excellence for artificial intelligence to be set up in top educational institutions
• Pradhan Mantri Kaushal Vikas Yojana 4.0 is launched to skill the youth for international opportunities, 30 Skill India International Centres will be set up across different States

Focus on Green growth:

With an aim to have a sustainable economy, the Government continues to give importance to the adoption of green energy and practice for farming, construction, and mobility to reduce the carbon footprint. This initiative along with the budget will be contributing to the net zero emission objective.

• This budget provides INR35,000 crore for priority capital investments towards energy transition, net zero objectives, and energy security.
• The government will support the setting up of a battery storage capacity of 4,000 MWH in India with viability gap funding. The aim is to touch green hydrogen production of 5 million tonnes by 2030.
• A green credit programme will be notified under the Environment Protection Act to encourage behavioural change amongst companies and local bodies.
• Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with an investment of Rs 20,700 crore including Central support of Rs 8,300 crore
• PM programme for PRANAM (Restoration, Awareness, Nourishment and Amelioration of Mother Earth) will be launched to incentivise states and union territories to promote alternative fertilisers and balanced use of chemical fertilisers.
• 10,000 bio-inputs resource centres to be set up to create a national-level distributed micro-fertilizer and pesticide manufacturing network
• 500 new ‘waste to wealth’ plants to be established under the GOBARdhan scheme to promote a circular economy

Focus on Ease of Doing Business:

• PAN is to a common business identifier, which is likely to ease the compliance burden
• One-stop solution for reconciliation and updating identity maintained by various agencies to be established using Digi locker and Aadhaar as a foundational identity
• Central Processing Centre (CPC) to be set up for faster response to companies filing forms under the Companies Act

Focus on MSME growth:

MSMEs are the growth engines of our economy. As the MSMEs contribute majorly to the development of the economy the government provides relief for MSMEs through Vivad se Vishwas-I 

• Relief to MSMEs by enabling refunds of up to 95 per cent of the deposit for contracts not executed during the COVID-19 period
• Revamped credit guarantee for MSMEs to take effect from Apr 1, 2023, with an infusion of Rs 9,000 crore in corpus
• Payment to MSME beyond time limits specified in MSMED Act will be allowed as a deduction only on actual payment. The deduction is allowed on an accrual basis only if payment is within the due date of the MSMED Act
• Expansion of Skill India Digital Platform for enabling demand-based skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes
• The turnover limit for availing the benefit of presumptive taxation enhanced to INR 3 crores for MSMEs, provided that cash transactions do not exceed 5%.
• Enhanced corpus of INR 2 trillion to be provided for MSMEs under the Credit Guarantee Scheme

Focus on Start-Ups:

Entrepreneurship is very important for a country’s economic development. India is now the third largest ecosystem for start-ups globally and ranks second in innovation and quality among middle-income countries. Some of the Government’s focus include

• Proposed framework for access to anonymised data.
• Income tax benefits, extended by a year till 2024 for start-ups
• Carry forward of loss benefit from 7 years to 10 years allowed for start-ups
• For incentives to eligible start-ups under the Section 80-IAC, the period of incorporation has been extended by 1 year to 31 March 2024

Highlights – Indirect Taxation:

• The basic import duty on compounded rubber has increased to 25% from 10%
• Customs duty on kitchen electric chimney increased to 15% from 7.5%
• To promote value addition in the manufacturing of TVs, customs duty on open cells of TV panels has been reduced to 2.5%
• Reduction in basic custom duty rates on goods other than textiles and agriculture from 21% to 13%.
• Proposed to increase import duty on silver bars to align it with gold and platinum
• Extended customs duty cut on imports of parts of mobile phones by 1 year

Highlights – Direct Taxation:

• The new Tax regime will now be the default tax regime, but still, people can avail the benefits under the old tax regime on an opt-out basis
• The limit of Rs 3 lakh for tax exemption on leave encashment on the retirement of non-government salaried employees is to be increased to Rs 25 lakh
• Proposed to increase the limit for presumptive taxation for MSMEs and certain professionals to Rs 3 crore and Rs 75 lakh, respectively
• The income rebate limit increased to Rs 7 lakh from Rs 5 lakh in the new tax regime
• Revised tax slabs under the new tax regime

Others:

• Reduction in the highest surcharge rate from 37% to 25% in the new tax regime
• TDS rate reduced to 20% on taxable withdrawal of EPF
• Tax concession granted- From Capital Gains on investment in Residential House – Sections 54 and 54F to Rs 10 Crores
• Average processing time for income tax returns was reduced from 93 days to 16 days
• New cooperatives that commence manufacturing in March, 2024 to get a lower tax rate of 15%