union budget

 

What is Budget?


A budget is a financial plan for a specified period say Year in general. The Government of India i.e., Ministry of Finance after consultation with all the other ministries prepares the annual budget. The budget will be generally presented by the Finance Minister on the first day of February in Parliament. The proposed budget will come into effect from April 1st of the respective year.

Why Budget 2023 is unique?


International economic organisations and bodies like IMF, World Bank, OECD, WTO predicting India is at the center stage of world economy with relatively highest forwarding GDP despite of many macro-economic headwinds such as global recession, higher inflation, fuel prices, and protectionism. With this background, it's not just India but the world is watching how the budget 2023 would be presented and what impact or influence that it is going to bring.

Undoubtedly, most awaited budget that is expected to have fiscal consolidation and Capital expenditure on par with earlier year to spur the employment opportunities and to activate the private sector spending.

Expectations before Budget

List of expectations / recommendations for the Indian union budget 2023 were originally published on Jan 17th 2023 @ Indian Budget 2023 | Pre-Budget Expectations

Key Takeaways & Analysis


 A Well rounded, win-win budget in a gloomy world economy. Good Budget for middle class salaried. 
 The underlying theme of self-reliant India will be appreciated by India.

  Middle class salaried friendly budget where the salaried get anywhere between 25K to 45K benefit from Tax Relief up to Rs. 7L.

  A ray of hope given for the agriculture sector by allocating Rs. 20L Crores

  Promotes ease of doing business and taxes.

  Relief to MSME in the area of taxes and promoting employment to an extent through higher than the normal infrastructure spending.

  What are we missing ?

Rationalisation in GST slab rates to promote some and discourage import oriented goods and / or services.

Supporting tax revenue against a whopping 33% increase in infrastructure spending is not clear.

No allocation to increase the tax enforcement.

Top 10 frequent questions on Budget 2023

more @ Indian Budget 2023 | Top 10 frequent questions

Budget 2023 Highlights


Taxes in General

  1. Fiscal Deficit for FY 2023-24 is 5.9% and it is targeted to be below 4.5% by 2025-26
  2. States will be allowed a fiscal deficit of 3.5% of GSDP
  3. India’s economic growth in the current year is estimated to be at 7% which is highest among all major economies

Income Tax

  1. A relief for MSME’s and professionals is provided under presumptive taxation scheme. The threshold under 44AD is increased to Rs 3 crores from Rs 2 crores and threshold under 44ADA is increased to Rs 75 lakhs from Rs 50 lakhs.
  2. Rebate u/s 87A has been increased to Rs 7 lakhs from Rs 5 lakhs under new tax Regime. This is not applicable for Old tax regime. This was an expectation from Team EZTax.in
  3. The highest surcharge rate of 37% is decreased to 25% under New Tax Regime. Taxpayers with taxable income of above Rs 5 crores is required to pay only 25% surcharge instead of 37%.
  4. Income Tax slab rates under New Tax regime has been changed which is as follows.

    From FY 2023-24 (per new Budget 2023)

    S.NoSlabTax Rates
    1Upto Rs 3,00,000Nil
    2From Rs 3,00,001 to Rs 6,00,0005%
    3From Rs 6,00,001 to Rs 9,00,00010%
    4From Rs 9,00,001 to Rs 12,00,00015%
    5From Rs 12,00,001 to Rs 15,00,00020%
    6More than Rs 15,00,00030%
       with these new rates, one may save Rs.25,000 to 48,000

    From FY 2020-21 to FY 2022-23 ( for comparison)

    S.NoSlabTax Rates
    1Upto Rs 2,50,000Nil
    2From Rs 2,50,001 to Rs 5,00,0005%
    3From Rs 5,00,001 to Rs 7,50,00010%
    4From Rs 7,50,001 to Rs 10,00,00015%
    5From Rs 10,00,001 to Rs 12,50,00020%
    6From Rs 12,50,001 to Rs 15,00,00025%
    7More than Rs 15,00,00030%
  5. The Tax exemption limit is increased to Rs 3 lakhs for the taxpayers under New Regime
  6. Leave Encashment exemption on retirement of non-government salaried employees is increased to Rs 25 lakhs from Rs 3 lakhs
  7. New tax regime will be the default tax regime. However taxpayer can continue to avail the old tax regime
  8. The deduction from capital gains on investment in residential house u/s 54 and 54F is capped at Rs 10 crore. This impacts very few people in the country
  9. Deduction for expenditure on payments made to MSME's will be allowed only when payment is actually made
  10. w.e.f 01st Apr 2023, if aggregate of premium for life insurance policies issued on or after 01st Apr 2023 is above Rs 5 lakhs, income from only those policies with aggregate premium upto Rs 5 lakhs shall be exempt
  11. TDS Rate on EPF withdrawal in Non PAN cases is reduced to 20% from 30%
  12. Minimum threshold of rs 10,000 for TDS deduction on online gaming is removed
  13. The threshold for TDS on Cash withdrawal from co-operative banks is increased to Rs 3 crores
  14. Date of incorporation for startups for tax benefits is extended to 31st Mar 2024 from 31st Mar 2023
  15. The benefit of carry forward of losses on change of shareholding of start-ups is extended to 10 years from 7 years
  16. New Co-operatives which will commence manufacturing activities till 31st Mar 2024 will get a lower tax benefit of 15%


for NRIs

No Changes or new rules has been notified for NRI's


for Cryptocurrencies

No Changes or new rules has been notified for Cryptocurrencies / VDAs / NFTs


GST

  1. No major changes in GST
  2. A simplified tax structure with fewer tax rates is proposed which helps in reducing compliance burden and improving tax administration

Customs Duty

  • Reduction in number of basic customs duty rates on goods, other than textiles and agriculture, from 21 to 13.
  • customs duty exemption is extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles
  • Relief in customs duty on import of certain parts and inputs like camera lens
  • Reduction in Basic Customs duty on parts of open cells of TV panels to 2.5%
  • Increase of import duty on silver door, bars and articles to align then with gold and platinum
  • The basic customs duty rate on compounded is increased from 10% to 25% or Rs 30 per kg whichever is lower
  • NCCD on specified cigarettes is revised upwards by 16%
  • Exemption from basic customs duty on raw materials for manufacture of CRGO steel, ferrous scrap and nickel cathode is being continued
  • Reduction in basic customs duty on lab grown diamonds

Ease of Doing Business

  1. PAN will be used as common identifier for all business establishments to bring common data among different agencies to enable ease of business.
  2. Central processing for new SEZ & clearances

Minimum Government & Maximum Governance

  1. There are new budget allocation in this category.

Innovation, R&D

  1. Agriculture accelerator fund will be set up to encourage Agri-startups by young entrepreneurs in rural areas
  2. Atmanirbhar clean plant program to boost the availability of disease free, quality planting material for high value horticultural crops
  3. Centres of excellence for AI to enable Make AI for India, and Make AI work for India will be established.

Reinvigorating Human Capital

  1. 3 centres of excellence for artificial intelligence will be set up in top educational institutions for realising the vision of Make AI in India and Make AI work for India
  2. NITI Aayog will be continued for an additional 3 years
  3. 100 labs for developing applications using 5G will be setup in engineering institutions

Infrastructure

  1. Capital investment outlay is increased by 33% to Rs 10 lakh crore which will be 3.3% of GDP
  2. Capital outlay of 2.40 lakh crore has been provided for railways
  3. 50 additional airports, heliports, water aerodromes and advance landing grounds will be setup for improving regional air connectivity

Health

  1. 157 new nursing colleges will be established
  2. Facilities in select ICMR labs will be made available for research by public and private medical college faculty and private sector R&D teams
  3. To promote research and innovation in pharmaceuticals , a new programme will be taken up through centres of excellence.
  4. A Mission to eliminate sickle cell Anaemia by 2047 will be launched

New Vs Old Personal Income Tax Regime from FY 2021-22


Top three observations from the analysis were

  1. New Tax Regime is Good if you want higher take home salary
  2. Higher Deductions Higher Tax Savings with Old Tax Regime
  3. To switch to New Tax Regime, you need to work with your employer

Pictorial analysis on New Vs Old Personal Income Tax Regime.