Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 on February 1 which had a greater emphasis on the rural sector, social sector schemes, infrastructure creation, and some relief for the middle-class.
The Budget for 2023-24 kept its focus on expanding Capex showing that the Modi government’s priorities are on building infrastructure across the country.
‘Saptarishi‘ or the Seven Priorities for the Government
Finance Minister Nirmala Sitharaman referred to seven priorities as ‘Saptarishi,’ describing them as a framework for the government.
- Inclusive development
- Reaching the last mile
- Infrastructure and investment
- Unleashing potential
- Green growth
- Youth Power
- Financial Sector
Fiscal Deficit
The FM stuck to the fiscal deficit roadmap in the Budget with a target of 5.9% in FY 24 and adhering to the target for the current year.
The Finance Minister projected the revised estimate for the FY23 fiscal deficit at 6.4 percent. She also reiterated the Centre’s commitment to bring fiscal deficit down to 4.5 percent of GDP by FY26.
The total gross market borrowing is estimated at INR 15.43 lakh crore for FY24. For financing the FY24 fiscal deficit, the FM said net market borrowing of INR 11.8 lakh crore balance financing is expected from small savings and other sources.
Budget 2023 Highlights for Capital Expenditure Outlay and Subsidies
The FM proposed an increase in capex by 33 per cent to INR 10 lakh crore. States are also being incentivized to spend more on infrastructure. INR 2.40 lakh crore has been allocated for Indian Railways, the highest ever.
An allocation of INR 1.99 lakh crore was made for the highways sector for 2022-23, which was revised to INR 2.17 lakh crore for 2023-24.
The defence budget was increased to INR 5.94 lakh crore for 2023-24 from last year’s allocation of INR 5.25 lakh crore, up 12 per cent and constituting 8 per cent of the total budget.
The government also announced an 11% hike in agriculture credit target to INR 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 INR 3 lakh at an effective rate of 7% per annum.
The RBI has decided to raise the limit for collateral-free agriculture loans from the previous amount of INR 1 lakh to INR 1.6 lakh.
The FM also announced a INR 35,000 crore outlay towards the country’s transition to cleaner energy.
An additional INR 19,700 crore was announced towards the government’s Green Hydrogen Mission to lower carbon intensity and reduce fossil fuel use, with the aim of achieving India’s goal of net zero carbon emission by 2070.
Union Budget 2023 Highlights: New Tax Regime
The middle-class has been given some relief, a the new tax regime is now the default tax regime. The government has taken a slew of measures to make the voluntary tax regime more attractive.
Under the new personal tax regime, income slabs will be reduced to five from the earlier six. 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%
People in the middle-income bracket of INR 9 lakh a year will see a reduction of 25 percent from the INR 60,000 they were paying earlier.
Basic exemption limit has been hiked to INR 3 lakh from INR 2.5 lakh currently under the new income tax regime in Budget 2023.
A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of INR 5 lakh to INR 7 lakh. Thus, individuals opting for the new income tax regime and having annual income up to INR 7 lakh will pay no income tax, making it more attractive for the salaried class.
Introduced in 2020, the new tax regime has none of the usual exemptions on insurance premium, mutual funds and other such investments. It did not find many takers, as it resulted in a higher tax burden in most cases for the middle-income groups.
Those choosing the old regime continued to get exemptions on investments, which was the preferred route.
The minister also brought down the highest applicable tax rate in India after surcharges, from 42.7 per cent to 39.
Rates and slabs under the old regime remain unchanged.
Salaried people with income of INR 15.5 lakh or more can also deduct a flat 52,500 as standard while calculating their taxable income.
Budget 2023 Highlights for Housing
The Budget 2023-24 allocated INR 79,000 crore for the Pradhan Mantri Awas Yojana (PMAY), giving a further boost to the governments programme to provide housing to the urban poor.
The outlay of PMAY is being enhanced by 66 percent, as Budget 2022 had allotted INR 48,000 crore for the completion of 80 lakh houses under PMAY.
Budget 2023 Highlights for Fintech
Fiscal support for digital public infrastructure (DPI) will continue in 2023-2024
An entity DigiLocker will be set up for use by MSMEs and large businessesThe scope of documents available in DigiLocker for individuals will be expanded
PM VIKAS scheme will now include access to digital payments and social security.
Subsidy for UPI expected to jump two-fold to INR 2,137 crore in FY23 over previous fiscal.
Allocation for digital payments promotion remains stagnant at INR 1500 crore for last three years
What is cheaper?
Aeroplanes and other aircrafts
Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form
Base metals or silver, clad with gold, not further worked than semi-manufactured, new or retreaded pneumatic tyres, of rubber, of a kind used on aircraft of heading
Platinum, unwrought or in semi-manufactured form, or in powder form
Waste and scrap of precious metal or of metal clad with precious metal; several aquaculture inputs
Some TV, camera parts
What is dearer?
Vehicle (including electric vehicles)
Silver Dore
Naphtha
Styrene
Vinyl Chloride Monomer
Compounded Rubber Articles of precious metals,
Imitation Jewellery
Electric Kitchen Chimney
Bicycles, Toys and parts of toys (other than parts of electronic toys)
Taxes on cigarettes hiked by 16 per cent