Tax Updates of Budget 2023

Ministry of finance

budget division

Key features of budget 2023-2024

LAST FULL-TIME UNION BUDGET BY MODI GOVERNMENT BEFORE THE 2024 ELECTIONS

A full Budget means- A Full Budget includes the passage of a finance bill to get Parliament's approval for any tax-related changes.

Vote on account or an Interim Budget- In an election year, the outgoing government doesn't tinker with the taxes or announce new schemes and sops as these are left at the disposal of the new government. In order to manage its expenditure for the interim period till a new government takes over and announces the Budget, the outgoing government presents what is called a vote on account or an interim budget to get the Parliament's approval for expenditure to be incurred for the next few months.

KEY POINTS IN TODAY’s BUDGET

VISION FOR AMRIT KAAL

??Opportunities for citizens with focus on the youth.

??Growth and Job creation

??Strong and stable Macro- Economic environment

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Nirmala Sitharaman lists 7 priorities

??Inclusive development

??Reaching the last mile

??Infrastructure and investment

??Unleashing the potential

??Green growth

??Youth power

??Financial sector

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Tax Related

??Under the new personal tax regime under section 115BAC, six income slabs have been reduced to five. The government has also increased the tax exemption limits in some of these categories.

0-3 lakh- nil

3-6 lakh -5%

6-9 lakh - 10%

9-12 lakh-15%

12-15 lakh -20%

Above 15 lakh - 30%

??The new tax regime will now be the default tax regime, but citizens can still avail of benefits under old tax regime on opt-out basis.

??No tax for income upto Rs 3 lakh/year

??Income rebate limit increased to Rs 7 lakh from Rs 5 lakh in new tax regime (i.e; Rebate increased to the specified limit)

??The government has proposed to reduce the highest surcharge rate from 37% to 25% under new tax regime, FM Sitharaman said while presenting the Budget 2023. Hence it can be said that maximum effective rate now will be 38% instead of 42.744%

??Taxpayers who have opted for the new tax regime for them the Budget announcements will lead to a saving of Rs 33,800, if earning up to Rs 7 lakh annually. Those with income up to Rs 10 lakh would save Rs 23,400 and Rs 49,400 saving would accrue to those earning up to Rs 15 lakh

??The income tax returns processing period has been reduced from 93 days to 16 days, says finance minister

??Finance minister has proposed to hike tax exemption on leave encashment on retirement of non-government salaried employees to Rs 25 lakh from Rs 3 lakh. "We are also making the new income tax regime the default tax regime however, citizens will continue to have the option to avail the benefits of the old tax regime.

??Old tax regime remains same

·????????The government did not announce any changes for taxpayers who are still following the old tax regime, that provides for tax exemptions and deductions on investments and expenses such as HRA. In what is being seen as push for salaried class taxpayer to switch to new tax regime where no exemptions on investments is provided, the finance minister in her budget for 2023-24 allowed a standard deduction of Rs 50,000 under the new regime.

??Revenue Secretary Sanjay Malhotra said taxation will now be on net winnings since the nature of online gaming is such that one plays several games in a series. TDS was previously calculated on every Rs 10,000 in winnings. Malhotra said -- "Some companies were then keeping the winning lower at Rs 10,000, so we have removed that now".

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For Aviation

??Finance Minister?Nirmala Sitharaman?on Wednesday announced hiking the capital expenditure by 33 per cent to Rs 10 lakh crore for infrastructure development for 2023-24 and will be at 3.3 percent of the GDP.

??Presenting the Budget, she said the newly established infrastructure finance secretariat will assist in attracting more private investment.

??With an aim to further improve regional air connectivity, she said the government will revive 50 additional airports, helipads, water aero drones and advanced landing grounds.

??The Budget also allocated Rs 3,113.36 crore to the union civil aviation ministry

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Budget announcements on digital initiatives focuses on artificial intelligence in the education sector

??Three centres of excellence for artificial intelligence will be established in top educational institutions

??100 laboratories in engineering institutions will be developing applications using 5G services

??A national digital library will be set up for children and adolescents for facilitating the availability of quality books across geographies, languages and genres

??Centre to recruit 38,800 teachers and support staff for 749 Eklavya Model Residential Schools that will service 3.5 lakh tribal students

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Big bonanza for senior citizens

??Budget 2023 has increased the maximum permissible investment in the senior citizen savings scheme, a popular investment among the elderly. The post office monthly income scheme, too, has been made more attractive.

??Finance minister Nirmala Sitharaman doubled the maximum limit under the Senior Citizen Savings Scheme (SCSS) to Rs 30 lakh from Rs 15 lakh. The scheme offers assured interest of Rs 8 percent per annum. The interest is paid quarterly.

??Additionally, the investment limit under the popular Post Office Monthly Income Scheme (POMIS) has been raised to Rs 9 lakh from Rs 4.5 lakh. In case of joint accounts held in POMIS, the investment limit has been hiked to Rs 15 lakh from Rs 9 lakh. The scheme pays monthly interest at the rate of 7.1 percent per annum.

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?For the defence sector

??While the Ministry of Defence has received the highest allocation among all ministries at Rs 5.94 lakh crore, it is not a significant jump from Rs 5.25 lakh crore for this FY

??Shares of?Bharat Electronics,?Bharat Dynamics,?Hindustan Aeronautics, Paras Defence and BEML tumbled 5-9 percent after?Finance Minister Nirmala Sitharaman completed her?Budget speech.

??Under its ambitious Atmanirbhar Bharat scheme, the government has banned imports of several items, including crucial parts used in defence equipment. Which means they are being manufactured in India now.

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?For renewable energy sector

??There is a 48% rise in allocation towards renewable energy sector in this budget.

??This year's allocation is Rs 6,900.68 crore (budget estimate) and 45.3% over the revised estimate (RE) of Rs 7,033 crore.

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Electric Vehicles

??Fully imported cars, including electric vehicles to cost more now.

??Customs duty on vehicles in completely built units (CBUs) costing less than USD 40,000 or with engine capacity less than 3,000 cc for petrol-run vehicles and less than 2,500 cc for diesel-run vehicles has been increased from 60% to 70%.

??Similarly, customs duty on electrically operated vehicles in CBU form, other than with cost, insurance and freight (CIF) value of more than USD 40,000, has also been raised to 70% from the previous 60%.

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For IT ministry

??The budget estimate for the Ministry of Electronics and Information Technology has been increased to Rs 16, 549.04 crore from the Rs 11,719.95 crore.

??The allocation for the period of 2021-22 stood at Rs 8,118.65 crore, making this year's budget estimate nearly double of what it was two years back.

?For Road ministry

??Allocation for the road transport and highways ministry (MoRTH) has been increase by 36% to around Rs 2.7 lakh crore for 2023-24 in the Budget.

??National Highways Authority of India (NHAI) has been allocated around Rs 1.62 lakh crore as part of MoRTH’s capital expenditure plan for 2023-24

??As per the government's revised estimates the NHAI will spend Rs 798 crore as IEBR in 2022-23.

For Fintech Sector?

??Digital payments rose 76% in transaction and 91% in value terms in 2022

??7,400 crore digital payments of Rs 126 lakh crore through UPI in 2022.

??Fiscal support for digital public infrastructure (DPI) will continue in 2023-2024

??The scope of documents available in DigiLocker for individuals will be expanded

??An entity DigiLocker will be set up for use by MSMEs and large businesses

??PM VIKAS scheme will now include access to digital payments and social security. Subsidy for UPI expected to jump two-folds to Rs 2,137 crore in FY23 over previous fiscal.

??Allocation for digital payments promotion remains stagnant at Rs 1500 crore for last three years

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Health and family welfare ministry

??The Union health and family welfare ministry has been allocated Rs 89, 155 crore in the Union budget FY24 marking a rise of a meagre 12% when compared to the revised budget estimated for FY 23.

??For the upcoming financial year, Rs 86,175 crore has been allocated to the department of health and family welfare while Rs 2,980 crore has been allocated for the department of health research.

??In the ongoing fiscal, the budget spent on the department of health and family welfare is Rs 76, 370 while Rs 2,775 crore had been marked for the department of health research.

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For Road ministry

??Allocation for the road transport and highways ministry (MoRTH) has been increase by 36% to around Rs 2.7 lakh crore for 2023-24 in the Budget.

??National Highways Authority of India (NHAI) has been allocated around Rs 1.62 lakh crore as part of MoRTH’s capital expenditure plan for 2023-24

??As per the government's revised estimates the NHAI will spend Rs 798 crore as IEBR in 2022-23

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Agriculture

??The government announced an 11% hike in agriculture credit target to Rs 20 lakh crore for next fiscal year.

??The government has also announced to provide a 2% interest subsidy to ensure farmers get short-term loans of up to Rs 3 lakh at effective rate of 7% per annum.

??The RBI has decided to raise the limit for collateral-free agriculture loans from the previous amount of Rs 1 lakh to Rs 1.6 lakh