Union Budget 2023-24 – Key Highlights, Budget Allocation & Impact on various Sectors
The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament on 1st February 2023. The Budget has a vision for Amritkaal and has seven Priorities known as Saptarishi 7. Continuing the path of fiscal consolidation, the Government intends to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26. This was stated by the Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman while presenting the Union Budget 2023-24 in the Parliament.
SUMMARY OF THE UNION BUDGET 2023-24
- UNION BUDGET 2023-24 PRESENTS VISION FOR AMRIT KAAL-BLUE PRINT FOR AN EMPOWERD AND INCLUSIVE ECONOMY
- THREE PRONGED FOCUS DRIVEN BY FOUR TRANSFORMATIVE OPPORTUNITIES CONSTITUTE FOUNDATION OF AMRIT KAAL
- CAPITAL INVESTMENT OUTLAY INCREASED BY 33% TO Rs. 10 LAKH CRORE
- EFFECTIVE CAPITAL EXPENDITURE AT 4.5% OF GDP
- FISCAL DEFICIT ESTIMATED TO BE 5.9 % OF GDP IN BE 2023-24
- REAL GDP TO GROW AT 7% IN FY2022-23
- EXPORTS TO GROW AT 12.5% IN FY 2023
- ATMANIRBHAR CLEAN PLANT PROGRAM WITH OUTLAY OF ₹2200 CRORE TO BE LAUNCHED TO BOOST AVAILABILITY OF QUALITY PLANTING MATERIAL FOR HIGH VALUE HORTICULTURAL CROPS
- 157 NEW NURSING COLLEGES TO BE ESTABLISHED
- OUTLAY FOR PM AWAS YOJANA ENHANCED BY 66% TO OVER RS. 79,000 CRORE
- HIGHEST EVER CAPITAL OUTLAY OF Rs. 2.40 LAKH CRORE PROVIDED FOR RAILWAYS
- URBAN INFRASTRUCTURE DEVELOPMENT FUND (UIDF) TO BE ESTABLISHED THROUGH USE OF PRIORITY SECTOR LENDING SHORTFALL
- 500 NEW ‘WASTE TO WEALTH’ PLANTS UNDER GOBARDHAN SCHEME TO BE ESTABLISHED AT TOTAL INVESTMENT OF Rs 10,000 CRORE
- 10,000 BIO-INPUT RESOURCE CENTRES TO BE SET-UP, CREATING NATIONAL-LEVEL DISTRIBUTED MICRO-FERTILIZER AND PESTICIDE MANUFACTURING NETWORK
- MANTRI KAUSHAL VIKAS YOJANA 4.0 TO BE LAUNCHED
- UNION BUDGET 2023-24 PROVIDES SUBSTANTIAL RELIEF FOR PERSONAL INCOME TAX
- NEW SLABS ANNOUNCED UNDER THE NEW TAX REGIME
- RESIDENT INDIVIDUAL WITH TOTAL INCOME UPTO ₹ 7 LAKH WILL NOT HAVE TO PAY ANY INCOME TAX UNDER NEW TAX REGIME
- STANDARD DEDUCTION OF ₹ 50,000 WILL ALSO BE AVAILABLE TO SALARIED INDIVIDUALS UNDER THE NEW TAX REGIME
- NEW TAX REGIME FOR INDIVIDUAL AND HUF WILL BE THE DEFAULT REGIME
- LIMIT FOR TAX EXEMPTION ON LEAVE ENCASHMENT ON RETIREMENT OF NON-GOVERNMENT SALARIED EMPLOYEES INCREASED TO ₹ 25 LAKH
SLEW OF PROPOSALS ANNOUNCED FOR THE COOPERATIVE SECTOR - INDIRECT TAX PROPOSALS AIM TO PROMOTE EXPORTS, BOOST DOMESTIC MANUFACTURING, ENHANCE DOMESTIC VALUE ADDITION, ENCOURAGE GREEN ENERGY AND MOBILITY
- NUMBER OF BASIC CUSTOMS DUTY RATES ON GOODS, OTHER THAN TEXTILES AND AGRICULTURE, REDUCED FROM 21 TO 13
FISCAL DEFICIT
- FISCAL DEFICIT TO BE AT 5.9%IN FY 2023-24
- REVENUE DEFICIT TO BE AT 2.9 % IN FY 2023-24
- FISCAL DEFICIT ON TRACK TO REACH BELOW 4.5% BY FY 2025-26
- 15.5 % Y-O-Y GROWTH IN GROSS TAX REVENUE IN 2022-23 OVER 2021-22
- DIRECT TAXES GREW AT 23.5% IN FIRST 8 MONTHS OF FY2022-23
- INDIRECT TAXES GREW AT 8.6% DURING THE SAME PERIOD
- STATES TO BE ALLOWED A FISCAL DEFICIT OF 3.5 PER CENT OF GSDP
- STATES TO BE PROVIDED A FIFTY-YEAR INTEREST FREE LOAN
The Finance Minister further stated that the fiscal deficit is estimated to be 5.9 per cent of GDP in BE 2023-24. To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs. 11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs. 15.4 lakh crore.In Budget Estimates 2023-24, the Finance Minister stated that the total receipts other than borrowings and the total expenditure are estimated at Rs. 27.2 lakh crore and Rs. 45 lakh crore respectively. Moreover, the net tax receipts are estimated at Rs. 23.3 lakh crore.
In the Revised Estimate 2023-24, the Finance Minister stated that the total receipts other than borrowings is Rs. 24.3 lakh crore, of which the net tax receipts are Rs. 20.9 lakh crore. The Revised Estimate of the total expenditure is Rs. 41.9 lakh crore, of which the capital expenditure is about Rs. 7.3 lakh crore. The Revised Estimate of the fiscal deficit is 6.4 per cent of GDP in RE 2022-23, adhering to the Budget Estimate.
- Revenue deficitThe Finance Minister stated that the revenue deficit is expected to be at 2.9 % in FY 2023-24 over 4.1% in 2022-23.
BUDGET IN A NUTSHELL:
The highlights of the Budget are as follows:
PART A
- Per capita income has more than doubled to ₹1.97 lakh in around nine years.
- Indian economy has increased in size from being 10th to 5th largest in the world in the past nine years.
- EPFO membership has more than doubled to 27 crore.
- 7,400 crore digital payments of ₹126 lakh crore has taken place through UPI in 2022.
- 11.7 crore household toilets constructed under Swachh Bharat Mission.
- 9.6 crore LPG connections provided under Ujjwala.
- 220 crore covid vaccination of 102 crore persons.
- 47.8 crore PM Jan Dhan bank accounts.
- Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana.
- Cash transfer of ₹2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
- Seven priorities of the budget ‘Saptarishi’ are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector.Atmanirbhar Clean Plant Program with an outlay of ₹2200 crore to be launched to boost availability of disease-free, quality planting material for high value horticultural crops.
- 157 new nursing colleges to be established in co-location with the existing 157 medical colleges established since 2014.
- Centre to recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students over the next three years.
- Outlay for PM Awas Yojanais being enhanced by 66% to over Rs. 79,000 crore.
- Capital outlay of Rs. 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about nine times the outlay made in 2013-14.
- Urban Infrastructure Development Fund (UIDF)will be established through use of priority Sector Lending shortfall, which will be managed by the national Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities.
- Entity DigiLocker to be setup for use by MSMEs, large business and charitable trusts to store and share documents online securely.
- 100 labs to be setup for 5G services based application development to realize a new range of opportunities, business models, and employment potential.
- 500 new ‘waste to wealth’ plants under GOBARdhan(Galvanizing Organic Bio-Agro Resources Dhan) scheme to be established for promoting circular economy at total investment of Rs 10,000 crore. 5 per cent compressed biogas mandate to be introduced for all organizations marketing natural and bio gas.
- Centre to facilitate one crore farmers to adopt natural farming over the next three years. For this, 10,000 Bio-Input Resource Centresto be set-up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network.
- Pradhan Mantri Kaushal Vikas Yojana 4.0, to be launched to skill lakhs of youth within the next three years covering new age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills.
- 30 Skill India International Centresto be set up across different States to skill youth for international opportunities.
- Revamped credit guarantee scheme for MSMEs to take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This scheme would enable additional collateral-free guaranteed credit of Rs 2 lakh crore and also reduce the cost of the credit by about 1 per cent.
- Central Processing Centreto be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
- The maximum deposit limit for Senior Citizen Savings Scheme to be enhanced from Rs 15 lakh to Rs 30 lakh.
- Targeted Fiscal Deficit to be below 4.5% by 2025-26.
- Agriculture Accelerator Fund to be set-up to encourage agri-startups by young entrepreneurs in rural areas.
- To make India a global hub for 'Shree Anna', the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies at the international level.
- ₹20 lakh crore agricultural credit targeted at animal husbandry, dairy and fisheries
- A new sub-scheme of PM Matsya Sampada Yojana with targeted investment of ₹6,000 crore to be launched to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market.
- Digital public infrastructure for agriculture to be built as an open source, open standard and inter operable public good to enable inclusive farmer centric solutions and support for growth of agri-tech industry and start-ups.
- Computerisation of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of ₹2,516 crore initiated.
- Massive decentralised storage capacity to be set up to help farmers store their produce and realize remunerative prices through sale at appropriate times.
- Sickle Cell Anaemia elimination mission to be launched.
- Joint public and Private Medical research to be encouraged via select ICMR labs for encouraging collaborative research and innovation.
- New Programme to promote research in Pharmaceuticals to be launched.
- Rs. 10 lakh crore capital investment, a steep increase of 33% for third year in a row, to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds.
- Aspirational Blocks Programme covering 500 blockslaunched for saturation of essential government services across multiple domains such as health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure.
- Rs. 15,000 crore for implementation of Pradhan Mantri PVTG Development Missionover the next three years under the Development Action Plan for the Scheduled Tribes.
- Investment of Rs. 75,000 crore, including Rs. 15,000 crore from private sources, for one hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors.
- New Infrastructure Finance Secretariatestablished to enhance opportunities for private investment in infrastructure.
- District Institutes of Education and Trainingto be developed as vibrant institutes of excellence for Teachers’ Training.
- A National Digital Library for Children and Adolescentsto be set-up for facilitating availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility.
- Rs. 5,300 crore to be given as central assistance to Upper Bhadra Project to provide sustainable micro irrigation and filling up of surface tanks for drinking water.
- ‘Bharat Shared Repository of Inscriptions’to be set up in a digital epigraphy museum, with digitization of one lakh ancient inscriptions in the first stage.
- ‘Effective Capital Expenditure’ of Centre to be Rs. 13.7 lakh crore.
- Continuation of 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions.
- Encouragement to states and cities to undertake urban planning reforms and actions to transform our cities into ‘sustainable cities of tomorrow’.
- Transition from manhole to machine-hole mode by enabling all cities and towns to undertake 100 percent mechanical desludging of septic tanks and sewers.
- iGOT Karmayogi, an integrated online training platform, launched to provide continuous learning opportunities for lakhs ofgovernment employees to upgrade their skills and facilitate people-centric approach.
- More than 39,000 compliances reduced and more than 3,400 legal provisions decriminalized to enhance Ease Of Doing Business.
- Jan Vishwas Bill to amend 42 Central Acts have been introduced to further trust-based governance.
- Three centres of excellence for Artificial Intelligence to be set-up in top educational institutions to realise the vision of “Make AI in India and Make AI work for India”.
- National Data Governance Policyto be brought out to unleash innovation and research by start-ups and academia.
- One stop solution for reconciliation and updation of identity and address of individuals to be established using DigiLocker service and Aadhaar as foundational identity.
- PAN will be used as the common identifier for all digital systems of specified government agencies to bring in Ease of Doing Business.
- 95 per cent of the forfeited amount relating to bid or performance security, will be returned to MSME’s by government and government undertakings in cases the MSME’s failed to execute contracts during Covid period.
- Result Based Financing to better allocate scarce resources for competing development needs.
- Phase-3 of the E-Courtsproject to be launched with an outlay of Rs. 7,000 crore for efficient administration of justice.
- R & D grant for Lab Grown Diamonds (LGD) sector to encourage indigenous production of LGD seeds and machines and to reduce import dependency.
- Annual production of 5 MMT under Green Hydrogen Mission to be targeted by 2030 to facilitate transition of the economy to low carbon intensity and to reduce dependence on fossil fuel imports.
- ₹35000 crore outlay for energy security, energy transition and net zero objectives.
- Battery energy storage systems to be promoted to steer the economy on the sustainable development path.
- 20,700 crore outlay provided for renewable energy grid integration and evacuation from Ladakh.
- “PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth” (PM-PRANAM)to be launched to incentivize States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers.
- ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’, MISHTI, to be taken up for mangrove plantation along the coastline and on salt pan lands, through convergence between MGNREGS, CAMPA Fund and other sources.
- Green Credit Programmeto be notified under the Environment (Protection) Act to incentivize and mobilize additional resources for environmentally sustainable and responsive actions.
- Amrit Dharohar schemeto be implemented over the next three years to encourage optimal use of wetlands, enhance bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities.
- A unified Skill India Digital platformto be launched for enabling demand-based formal skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes.
- Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Schemeto be rolled out to provide stipend support to 47 lakh youth in three years.
- At least 50 tourist destinations to be selected through challenge mode; to be developed as a complete package for domestic and foreign tourists.
- Sector specific skilling and entrepreneurship development to be dovetailed to achieve the objectives of the ‘Dekho Apna Desh’ initiative.
- Tourism infrastructure and amenities to be facilitated in border villages through the Vibrant Villages Programme.
- States to be encouraged to set up a Unity Mallfor promotion and sale of their own and also all others states’ ODOPs (One District, One Product), GI products and handicrafts.
- National Financial Information Registryto be set up to serve as the central repository of financial and ancillary information for facilitating efficient flow of credit, promoting financial inclusion, and fostering financial stability. A new legislative framework to be designed in consultation with RBI to govern this credit public infrastructure.
- Financial sector regulators to carry out a comprehensive review of existing regulations in consultation with public and regulated entities. Time limits to decide the applications under various regulations would also be laid down.
- To enhance business activities in GIFT IFSC, the following measures to be taken.
- Delegating powers under the SEZ Act to IFSCA to avoid dual regulation.
- Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI.
- Permitting acquisition financing by IFSC Banking Units of foreign bank.
- Establishing a subsidiary of EXIM Bank for trade re-financing.
- Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act
- Recognizing offshore derivative instruments as valid contracts.
- Amendments proposed to the Banking Regulation Act, the Banking Companies Act and the Reserve of India Act to improve bank governance and enhance investors’ protection.
- Countries looking for digital continuity solutions would be facilitated for setting up of their Data Embassies in GIFT IFSC.
- SEBI to be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognize award of degrees, diplomas and certificates.
- Integrated IT portal to be established to enable investors to easily reclaim the unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.
- To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificateto be launched. It will offer deposit facility upto Rs 2 lakh in the name of women or girls for tenure of 2 years (up to March 2025) at fixed interest rate of 7.5 per cent with partial withdrawal option.
- The maximum deposit limit for Monthly Income Account Scheme to be enhanced from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account.
- The entire fifty-year interest free loan to states to be spent on capital expenditure within 2023-24. Part of the loan is conditional on States increasing actual Capital expenditure and parts of outlay will be linked to States undertaking specific loans.
- Fiscal Deficit of 3.5% of GSDP allowed for States of which 0.5% is tied to Power sector reforms.
- Revised Estimates 2022-23:
-
- The total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore.
- The total expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore.
- The fiscal deficit is 6.4 per cent of GDP, adhering to the Budget Estimate.
- Budget Estimates 2023-24:
- The total receipts other than borrowings is estimated at Rs 27.2 lakh crore and the total expenditure is estimated at Rs 45 lakh crore.
- The net tax receipts are estimated at Rs 23.3 lakh crore.
- The fiscal deficit is estimated to be 5.9 per cent of GDP.
- To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 lakh crore.
- The gross market borrowings are estimated at Rs 15.4 lakh crore.
PART – B
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.
New tax rates
| Total Income (Rs) | Rate (per cent) |
| Up to 3,00,000 | Nil |
| From 3,00,001 to 6,00,000 | 5 |
| From 6,00,001 to 9,00,000 | 10 |
| From 9,00,001 to 12,00,000 | 15 |
| From 12,00,001 to 15,00,000 | 20 |
| Above 15,00,000 | 30 |
- 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.
- Opportunity provided to sugar co-operatives to claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure. This expected to provide them a relief of almost Rs. 10,000 crore.
- Provision of a higher limit of Rs. 2 lakh per member for cash deposits to and loans in cash by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).
- 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.
- Deduction from capital gains on investment in residential house under sections 54 and 54F to be capped at Rs. 10 crore for better targeting of tax concessions and exemptions.
- Proposal to limit income tax exemption from proceeds of insurance policies with very high value. Where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above Rs. 5 lakh, income from only those policies with aggregate premium up to Rs. 5 lakh shall be exempt.
- Income of authorities, boards and commissions set up by statutes of the Union or State for the purpose of housing, development of cities, towns and villages, and regulating, or regulating and developing an activity or matter, proposed to be exempted from income tax.
- 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.
- Deployment of about 100 Joint Commissioners for disposal of small appeals in order to reduce the pendency of appeals at Commissioner level.
- Increased selectivity in taking up appeal cases for scrutiny of returns already received this year.
- Period of tax benefits to funds relocating to IFSC, GIFT City extended till 31.03.2025.
- Certain acts of omission of liquidators under section 276A of the Income Tax Act to be decriminalized with effect from 1st April, 2023.
- Carry forward of losses on strategic disinvestment including that of IDBI Bank to be allowed.
- Agniveer Fund to be provided EEE status. The payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 proposed to be exempt from taxes. Deduction in the computation of total income is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi account.
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.
- Denatured ethyl alcohol used in chemical industry exempted from basic customs duty.
- Basic customs duty reduced on acid grade fluorspar (containing by weight more than 97 per cent of calcium fluoride) to 2.5 per cent from 5 per cent.
- Basic customs duty on crude glycerin for use in manufacture of epicholorhydrin reduced to 2.5 per cent from 7.5 per cent.
- Duty reduced on key inputs for domestic manufacture of shrimp feed.
- Basic customs duty reduced on seeds used in the manufacture of lab grown diamonds.
- Duties on articles made from dore and bars of gold and platinum increased.
- Import duty on silver dore, bars and articles increased.
- Basic Customs Duty exemption on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode continued.
- Concessional BCD of 2.5 per cent on copper scrap is continued.
- Basic customs duty rate on compounded rubber increased to 25 per cent from 10 per cent or 30 per kg whichever is lower.
- National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by about 16 per cent.
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.
- 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 (ECOs).
SECTORWISE ALLOCATION OF BUDGET 2023-24:
Union Budget 2023: Impact on various Sectors:
WINNERS
Agriculture
The government has increased spending on the farm sector, which accounts for about 19% of the economy. The budget proposes to spend 22 billion rupees ($269 million) on high-value horticulture and set up an agriculture accelerator fund to finance farm startups. This will benefit companies such as Kaveri Seed Co., Dhanuka Agritech Ltd., Bombay Super Hybrid Seeds, Rashtriya Chemicals & Fertilizers Ltd.
Tourism
To capture the surge in travel demand, India will select 50 destinations to promote domestic tourism. It will also develop an app to guide tourists on food streets, security, physical and virtual connectivity to lift their experience. Ticketing companies and hotels such as Indian Railway Catering and Tourism Corp., Thomas Cook India Ltd., Indian Hotels and EIH Ltd. will be the beneficiaries.
Infrastructure
Crucial to boosting last-mile connectivity, India has decided to build 50 additional airports, heliports and aerodromes, and identified 100 fresh projects. Railways will benefit from a record capital outlay of 2.4 trillion rupees. This is a win for airport operators such as Adani Airport Holdings Ltd., GMR Airports Infrastructure Ltd., GVK Airport Developers Ltd., and construction companies like Larsen & Toubro Ltd. and Bharat Heavy Electricals Ltd.
Taxpayers
As expected, Modi’s administration gave some relief to taxpayers. Individuals with income up to 700,000 rupees won’t have to pay tax under the new income tax regime. The number of tax slabs were reduced, while the maximum tax rate was cut to 39%. This will leave more money with the middle class and boost consumption demand.
Metal/Cement
Higher capital expenditure and investments for housing, infrastructure, railways announced in the budget are positive for steel mills and cement makers. Key gainers include Tata Steel Ltd., JSW Steel Ltd., Jindal Steel & Power Ltd.
Electric Vehicles
India plans to provide impetus to green mobility by exempting import of capital goods required to manufacture lithium-ion cells used in electric vehicle batteries from customs duty. This will be a boost for battery makers such as Exide Industries Ltd. and Amara Raja Batteries Ltd. and automakers like Tata Motors Ltd. and Mahindra & Mahindra Ltd.
Green Energy
The budget provided 350 billion rupees for investment in energy transition and carbon neutrality initiatives. The government will provide financial support to battery energy-storage systems with a capacity of 4,000 megawatt hours.
LOSERS
Defense
The budget lacked impetus for defense manufacturing, said Gaurav Mehndiratta, partner and head of aerospace and defense at KPMG. Military budget got a paltry increase of 7%, compared with a 33% increase in the nation’s overall capital expenditure, he said. That’s a surprise given the rising tensions between India and China. State-run firms Hindustan Aeronautics Ltd. and Mazagon Dock Shipbuilders Ltd., which have benefited from India’s local manufacturing push, were key decliners, falling more than 6% each.
Cigarette Makers
Shares of Godfrey Phillips India plunged in Mumbai after India increased a tax, effective Feb. 2, on specified cigarettes by about 16%.
Jewelers
Jewelry stocks dropped after the government left import taxes on gold unchanged despite demand from the bullion industry to reverse the hike announced in July. The government also increased the import tax on silver. A higher tax increases the cost for consumers as the country imports almost all the bullion it consumes. Benchmark gold futures in Mumbai rose as much as 1.3% to an all-time high of 57,950 rupees per 10 grams. Key losers would be Kalyan Jewellers India Ltd., Titan Co. and PC Jeweller Ltd.
Oil Refiners
Indian state-run refiners Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. are likely losers as the government didn’t announce any compensation toward losses on keeping a check on diesel and gasoline prices. There have been demands from the companies and the oil ministry to partly cover the losses via budgetary support.
Foreign Carmakers
Imported automobiles, including electric vehicles, will attract higher levies. The customs duty on cars and EVs priced above $40,000 and imported as completely-built units was increased to 70% from 60%. Foreign carmakers like BYD Co. and Mercedes Benz that rely on imported cars to serve Indian market will face challenges.
This story has been published from a wire agency feed without modifications to the text. (Source: https://www.livemint.com/budget/news/who-gained-and-who-lost-from-india-s-union-budget-2023-11675256896414.html)
Here's how experts, industry insiders reacted to this year's Budget:
- Automobile industry terms Budget as growth-oriented
"The automobile industry on Wednesday termed the Budget for 2023-24 as growth-oriented, saying the proposed measures will drive sustainable yet inclusive growth at a rapid pace.
Automobile industry body Society of Indian Automobile Manufacturers President Vinod Aggarwal said a 33 per cent increase in capital outlay with an effective provision of Rs 13.7 lakh crore will spur growth in the economy, resulting in a positive impact on the domestic automobile industry.
"Another appreciable feature of the budget is putting more money in the hands of the individuals by lowering effective personal income tax rates that should increase consumption and consequently lead to more demand," he added. All in all, this is a growth-oriented budget with a positive impact on the auto sector, Aggarwal said.
- Karnataka industry hails Union budget as development, infrastructure-oriented one
"Industry bodies in Karnataka have termed the Union Budget presented by Finance Minister Nirmala Sitharaman on Wednesday as "development and infrastructure-oriented" and "one that has something for everybody." Federation of Karnataka Chambers of Commerce & Industry (FKCCI), an apex organisation of industry, trade and service sectors in the State, termed the budget as an overall developmental and infrastructure-oriented one. Stating that this is a progressive, development-oriented and people-friendly budget, FKCCI president B V Gopal Reddy said the chamber welcomes several initiatives announced by the Finance Minister in the areas of millets, health sector, tourism industry, ease of doing business, and the income tax slabs. Speaking about the credit guarantee scheme for the MSME support, he said, "Earlier also, the scheme was there but there was a delay in reaching the beneficiary. This time an additional corpus of Rs. 9,000 crore has been announced for MSME credit guarantee, but we have to wait and see how fast it will reach the beneficiary."
- Focus on AI will accelerate digitsation of Indian economy, says CEO of TeamLease HRtech Sumit Sabharwal
The Focus on AI is a step in the right direction. It'll accelerate the digitalization of the Indian economy, saysSumit Sabharwal, CEO of TeamLease HRtech
"The Focus on AI is a step in the right direction. It'll accelerate the digitalization of the Indian economy. Indian companies in sectors like health tech, HR tech, fintech, etc will compete globally if our human capital is skilled in AI. Tax reform makes complete sense considering the inflation. It'll increase the disposable income in the hands of the Indian workforce; and push the demand in the market. It'll make India stronger to have an accelerated growth."
- 'Budget provided much-needed oxygen to the MSME sector, tax slab will keep sector floating'
"Union Finance Minister Nirmala Sitharaman's 2023-24 Budget has provided much-needed oxygen to the MSME sector that was badly affected by the Covid-induced crisis, said industrialists and various chambers of commerce. They expressed the hope that the announcements by the FM will give leverage to the sector.
Vadodara Chambers of Commerce and Industries president Himanshu Patel, welcoming the Budget, said: "The much needed booster dose has been given by the Finance Minister for the MSME, the tax slab will definitely keep the sector floating. It suffered a major setback in 2020."
CII's regional vice president Darshan Shah said: "In the budget many schemes, fund allocations and various schemes have been announced for the MSME sector. It will help the sector to bounce back, which will play a major role in generating employment. There is mild dissatisfaction too, MSME's different industries were expecting reduction in GST tariffs, but it remains untouched."
- Govt's efforts to develop skills for youth will benefit overall progress of India: Rahul Goyal of ADP
"The government’s several efforts towards skilling the youth of the nation have been laudable. Pradhan Mantri Kaushal Vikas Yojana 4.0 which will be launched to skill lakhs of youth within the next 3 years will significantly benefit in the overall enhancement and development of the youth in the country. The National Education Policy will enable youth empowerment by facilitating job creation at scale thus supporting business opportunities is a step in the right direction. Furthermore, the pan India national apprenticeship that is a direct benefit transfer scheme to provide support to 47 lakh youths in 3 years will also prove highly advantageous and will enable growth and development of young guns in the right direction.
The launch of a unified skill India digital platform for enabling demand based formal skilling will help the country successfully progress towards becoming a digital savvy nation. Overall, the budget includes significant measures that will help in advancement of the youth of the country, help them become more competitive and secure positions on the global world map.”
- To make the $5 trillion GDP dream a reality, doubling down on digital infrastructure is vital: Saahil Goel, Co-founder and CEO, Shiprocket
"To make the $5 trillion GDP dream a reality, doubling down on digital infrastructure is vital. Hence, the budget should be centred around digitization initiatives that empower the MSME sector. The impact generated would be felt in the improved urban and rural mobility as we see more ports, roads, airports and other infrastructure developing. This will culminate in reducing logistics costs - from roughly 13-14% of the GDP to 8%. The eventual target would be to mark India’s presence in the top 25 countries with the best Logistics Performance Index(LPI)."
- The gem and jewellery industry is hopeful that the govt will announce supporting measures, schemes for the industry: Eshwar Surana, managing director at Raj Diamonds
"The gem and jewellery industry is hopeful that the government will announce supporting measures and specific schemes for the industry in the forthcoming Budget as it holds huge potential to create jobs and increase exports year on year and become a major driver of economic growth. The need of the hour is to formulate policies and bring transparency that aim at bridging the gap between organised and unorganised players. We are also hoping for a further reduction in customs duty which will regularize prices and in turn, boost customer demand.
Setting up one of the world’s largest gems and jewellery park in Navi Mumbai will be a major boost to initiate new business or strengthen existing ventures and will definitely make India a global leader. Other initiatives by the ministry such as a simplified regulatory framework for gem & jewellery exports through e-commerce, hallmarking norms etc will also go a long way in boosting the growth of the sector. Consumer sentiments have picked up in a big way in the post pandemic era and we have seen a robust demand during the last festive and ongoing wedding season. As the economy grows at a fast clip, we are very optimistic about the diamond and jewellery industry and it will continue to play a significant role in India’s GDP despite several global headwinds.
Overall, the upcoming Union Budget should focus on boosting disposable incomes of the burgeoning middle-class through favourable fiscal policies and beneficial tax regimes that should eventually lead to demand generation and accelerate consumption."
- 100% FDI will help insurers to infuse fresh capital into the system and secure the next two decades of growth: Anup Rau , MD & CEO, Future Generali India Insurance
"Among the host of expectations from the Budget, the proposal to increase the FDI limit to 100% in insurance is unlikely be introduced --especially since the FDI limit has just been recently increased to 74%. However, this is a conversation that we must have with the policy makers. 100% FDI will help insurers to infuse fresh capital into the system and secure the next two decades of growth. The Indian economy and the insurance market are both tempting to insurers overseas. But let's also bear in mind that the number of insurers in India is infinitesimally small, compared to our global peers. Part of the problem is the challenge for global Insurers to find suitable local partners. With over 60 insurers between life and general insurance and a large number of them joint ventures, there is really an acute shortage of local partners, who either have the ability or the inclination to get into this space. One can't over state how critical permitting 100% FDI is- it’s a lot easier (or less politically sensitive) for the administration to increase the FDI limit to 100% than it was to increase from 49% to 74%."
- The government should reduce the present rate of registration and stamp duty to register documents: Arjun Gulati, Co- Founder, Easydesq
"The demand for co-working office spaces has seen tremendous growth, especially in the year 2022, and the post-lockdown scenario is bringing in a wave of new opportunities for co-working players. Medium-to-long-term fundamentals remain sound as companies seek out alternative options to reduce costs and capital expenditure. As organisations are already back in the office, redesigning and restructuring existing office spaces is posing yet another challenge. This is where co-working spaces come into the picture. These shared spaces can respond to design changes required post-Covid quicker and more efficiently than traditional office spaces. However, to drive the growth of this segment, as a PropTech founder I have certain expectations from the upcoming union budget that are mentioned below:
Recognition of the co-working segment under a special scheme: The modern workplace itself has transformed over the years and the concept of co-working is one such example. I feel that government should recognize the industry under special programs like REITs and provide some tax benefits to promote the growth of this sector. The second important thing is the TDS rate that is applicable to the co-working sector. Presently, the TDS rate for the co-working segment is 10% because we provide renting of both movables and immovables. As the shared space industry grows, a lower TDS rate will give this sector a major boost helping companies to provide real estate solutions to clients at economical rates, which will further help in a better flow of working capital. Another important aspect that should be given importance is the financial support to the start-ups as it will help more and more people to pursue their entrepreneurial journey. It will also give a boost to the co-working business as several entrepreneurs who opt for these shared spaces are early and mid- start-ups. I also feel the government should reduce the present rate of registration and stamp duty to register documents. This will give a fillip to both start-ups as well as co-working spaces.
There is also a need for a reduction in the GST rate for start-ups, as it will make a significant impact on their finances. Currently, co-working spaces charge a GST of 18% to all clients, which is huge for new business owners. Finally, I think, institutional capital is crucial to co-working spaces that are dependent on funds for multiple factors. The government should allow banks to provide loans to co-working firms against the cash flow of co-working players along with providing investment benefits to investors of these co-working spaces."
- Our expectation from Budget 2023 is for the government to plan for a long-term sustainable model for MSMEs: Nitin Sharma, MD & CPTO at CredAble
"Our expectation from Budget 2023 is for the government to plan for a long-term sustainable model for MSMEs. Considering the current economic uncertainty, MSMEs struggling with soaring commodity prices and raw material supply disruptions are hoping for some immediate relief. MSMEs need schemes much like the Emergency Credit Line Guarantee Scheme (ECLGS) to tide over the challenging times and meet the rising, time-sensitive capital needs.
With talks of the government taking a renewed focus on the Made in India brand and import substitution, MSMEs will be in a better position to grow and scale their operations significantly. There is also a dire need to introduce regulatory measures that will attract more FDI, which in turn, will boost the economic activities of MSMEs. In addition to the reduction in the corporate tax rates, we also hope for a reduction in the Income Tax rates for Partnership firms, LLPs, and proprietorships which comprise the majority of MSMEs. As very few MSMEs have been able to avail the facility of the recently launched TReDS (Trade Receivables Discounting System), owing to the lengthy process involved—there are expectations to further expand the TReDS facility to cover more MSMEs as well as include certain concessions. As the flow of funds to the MSME sector gets interrupted due to delayed payments, provisions to settle the payments faster as well as enable easier lines of credit for MSMEs are needed."
- There is a need for various financial and non-financial services that will help MSMEs in their growth journey: Vipul Verma, Executive Vice President, Wadhwani Advantage at Wadhwani Foundation
“With multiple government schemes assisting in the growth of MSME ecosystem, there is an increasing demand for various financial and non-financial services that will help MSMEs in their growth journey. Incentivising these service providers and improving reach to the MSME segment will significantly increase the supply. This will help MSMEs build systems, talent, capacity, infrastructure, access to capital and other ingredients to meet the growth demand.”
Budget Terminology:
Fiscal Deficit (FD) is the adverse fiscal balance which is a difference between the Revenue Receipts Plus Non-Debt Capital Receipts (NDCR) i.e. total of the non-debt receipts and the total expenditure. FD is reflective of the total borrowing requirement of Government.
Revenue Deficit (RD) refers to the excess of revenue expenditure over revenue receipts.
Effective Revenue Deficit (ERD) is the difference between Revenue Deficit and Grant-in-Aid for Creation of Capital Assets.
Primary Deficit is measured as Fiscal Deficit less interest payments.
Effective Capital Expenditure (Eff-Capex) refers to the sum of Capital Expenditure and Grants-in-Aid for Creation of Capital Assets.