Union Budget 2023-24

Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.

The Union Budget 2023-24 highlighted that the current year’s economic growth is estimated to be at 7%, “highest among all the major economies.” Finally, with regards to the fiscal deficit, she retained it to the target of 6.4% in the revised estimate for FY2022-23 and reduced it to 5.9% for the next fiscal. Fiscal deficit would be brought down to below 4.5% by 2025-26, Ms. Sitharaman said.

Size of The Union Budget 2023-24:
The total expenditure in BE 2023-24 is estimated at `45,03,097 crore(45.03 Lakh Crore) of which total capital expenditure is `10,00,961 crore(10 Lakh Crore). Budget 2023-24 reflects continuing strong commitment of the Union Government to boost economic growth by investing in infrastructure development leading to an increase in capital expenditure by 37.4 per cent over RE 2022-23.

Effective Capital Expenditure, at 13,70,949 Crore(13.71 Lakh Crore) in BE 2023-24, shows an increase of 30.1 per cent over RE 2022-23.

The Union Budget 2023-24 has been presented in two parts. The key highlights of the Budget are as follows:

PART-A of The Union Budget 2023-24

Seven priorities of the Union Budget 2023-24 : ‘Saptarishi’ are-

1. Inclusive development
2. Reaching last mile
3. Infrastructure and investment
4. unleashing potential
5. Green growth
6. Youth Power
7. Financial Sector

PART–B of The Union Budget 2023-24

Union Budget 2023-24: DIRECT TAXES:

• Direct Tax proposals aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens.
• Constant endeavour of the Income Tax Department to improve Tax Payers Services by making compliance easy and smooth.
• To further improve tax payer services, proposal to roll out a next-generation Common IT Return Form for tax payer convenience, along with plans to strengthen the grievance redressal mechanism.
• Rebate limit of Personal Income Tax to be increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lakh to not pay any tax.
• Tax structure in new personal income tax regime, introduced in 2020 with six income slabs, to change by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lakh. Change to provide major relief to all tax payers in the new regime.

Union Budget 2023-24: New tax rates

• Proposal to extend the benefit of standard deduction of Rs. 50,000 to salaried individual, and deduction from family pension up to Rs. 15,000, in the new tax regime.
• Highest surcharge rate to reduce from 37 per cent to 25 per cent in the new tax regime. This to further result in reduction of the maximum personal income tax rate to 39 per cent.
• The limit for tax exemption on leave encashment on retirement of non-government salaried employees to increase to Rs. 25 lakh.
• The new income tax regime to be made the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
• Enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation proposed. Increased limit to apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
• Deduction for expenditure incurred on payments made to MSMEs to be allowed only when payment is actually made in order to support MSMEs in timely receipt of payments.
• New co-operatives that commence manufacturing activities till 31.3.2024 to get the benefit of a lower tax rate of 15 per cent, as presently available to new manufacturing companies.
• A higher limit of Rs. 3 crore for TDS on cash withdrawal to be provided to co-operative societies.
• Date of incorporation for income tax benefits to start-ups to be extended from 31.03.23 to 31.3.24.
• Proposal to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years
• Minimum threshold of Rs. 10,000/- for TDS to be removed and taxability relating to online gaming to be clarified. Proposal to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year.
• Conversion of gold into electronic gold receipt and vice versa not to be treated as capital gain.
• TDS rate to be reduced from 30 per cent to 20 per cent on taxable portion of EPF withdrawal in non- PAN cases.
• Income from Market Linked Debentures to be taxed.

Union Budget 2023-24: INDIRECT TAXES:

• Number of basic customs duty rates on goods, other than textiles and agriculture, reduced to 13 from 21.
• Minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha.
• Excise duty exempted on GST-paid compressed bio gas contained in blended compressed natural gas.
• Customs Duty on specified capital goods/machinery for manufacture of lithium-ion cell for use in battery of electrically operated vehicle (EVs) extended to 31.03.2024
• Customs duty exempted on vehicles, specified automobile parts/components, sub-systems and tyres when imported by notified testing agencies, for the purpose of testing and/ or certification, subject to conditions.
• Customs duty on camera lens and its inputs/parts for use in manufacture of camera module of cellular mobile phone reduced to zero and concessional duty on lithium-ion cells for batteries extended for another year.
• Basic customs duty reduced on parts of open cells of TV panels to 2.5 per cent.
• Basic customs duty on electric kitchen chimney increased to 15 per cent from 7.5 per cent.
• Basic customs duty on heat coil for manufacture of electric kitchen chimneys reduced to 15 per cent from 20 per cent.
• Duties on articles made from dore and bars of gold and platinum increased.
• Import duty on silver dore, bars and articles increased.

Union Budget 2023-24: Legislative Changes in Customs Laws:

• Customs Act, 1962 to be amended to specify a time limit of nine months from date of filing application for passing final order by Settlement Commission.
• Customs Tariff Act to be amended to clarify the intent and scope of provisions relating to Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and Safeguard Measures.

Union Budget 2023-24: CGST Act to be amended:

• To raise the minimum threshold of tax amount for launching prosecution under GST from one crore to two crore;
• To reduce the compounding amount from the present range of 50 to 150 per cent of tax amount to the range of 25 to 100 per cent;
• decriminalise certain offences;
• To restrict filing of returns/statements to a maximum period of three years from the due date of filing of the relevant return/statement; and
• To enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators