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Union Budget 2023: An Overview

Finance Minister Nirmala Sitaraman presented the Union Budget 2023 today, which broadly included the vision for Amrit Kaal, the saptarishi, i.e. the 7 priorities of the budget and the tax proposals. The present article discusses the key highlights from the Union Budget 2023.

Vision for Amrit Kaal

The vision for Amrit Kaal includes an economy which is technology-driven and knowledge-based, along with strong public finances, a robust financial sector and

The Jan Bhagidari through Sabka Saath Sabka Prayas is considered essential for achieving the same

The economic agenda for achieving this vision is focused on three things: i.e. facilitating ample opportunities for citizens with special emphasis on the nation’s youth for fulfilling their aspirations, growth and job creation; strengthening macro-economic stability.

There are four opportunities that are considered to be transformative during the Amrit Kaal Economic Empowerment of Women, PM Vishwakarma KAushal Samman tourism and green growth

Priorities of the Budget

The budget adopted 7 priorities for the budget, termed Saptarishi’ which is believed to provide guidance through the Amrit Kaal. The priorities are elaborated below –

Inclusive Development

The first priority of the union budget is Inclusive Development or Sabka Saath Sabka Vikas, which consists of the following.

Agriculture and Cooperatives

This focuses on the below-mentioned areas –

• Building a Digital Public Infrastructure which acts as an accessible, inclusive and informative solution for the Indian farmers.
• Setting up an Agriculture Accelerator Fund for the encouragement of innovative startups in the rural areas.
• Launching ANB Horticulture Clean Plant Program for boosting the production of high-value horticulture crops.
• Targeted funding of Rs 20 lakh crore agricultural credit to be targeted at Animal Husbandry, Fisheries and Dairy sector.
• Making India a Global Hub for Millets i.e. Sree Anna, for which the support shall be provided to IIMR Hyderabad for the purpose of promoting research.
• Setting up a storage capacity which is widely available with the objective of enhancing the remuneration of the farmers by enabling sale at appropriate times.
• Food Security:  The commitment of food security shall be continued with aa scheme to supply free food grain to all Antyodaya and priority households for a period of one year starting January this year under PM Garib Kalyan Ann Yojana. 
• Significant progress have been made in the direction of Swachh Bharat, PM Suraksha Bima Yojana, Direct benefit transfer, and Jan Dhan accounts. The focus would still remain on job creation and youth empowerment.

Health

The following steps shall be taken in this regard –

• Establishment of 157 new nursing colleges
• Launch of Sickle Cell Anaemia elimination mission
• Launch of a new programme for promoting research in the pharmaceuticals
• Encouragement of joint public and private medical research via ICMR^[1] labs

Education and Skilling

The education and skilling shall be done through the following –

• Revamping the Teacher’s Training i.e. the District Institute of Education and Training.
• Setting up national Digital Libraries for children and adolescents.

Encouraging the states towards setting up physical libraries at

• Panchayat and ward levels

Reaching the Last Mile

This is the second priority of the budget and shall include the following –

• Launching of Pradhan Mantri PVTG Development Mission
• Providing financial assistance to Karnataka for the purpose of micro irrigation in drought-prone regions
• Recruiting more teachers for the 740 Eklavya Model Residential Schools
• Setting up the Bharat Shared Repository of Inscriptions

Infrastructure and Investment

The third priority of the Union Budget 2023 is the Infrastructure and Investment, and the below-mentioned steps shall be taken in respect of the same –

• Increase in the capital investment outlay by 33.4 per cent to 10 lakh cr.
• Continue with the 50 yr interest-free loan to state governments for the purpose of incentivizing the infrastructure investments.
• Highest ever capital outlay of Rs 2.4 lakh crore for the railways
• 100 transport infrastructure projects have been identified for end-to-end connectivity for ports, steel, coal, and fertilizer sectors
• Create urban infrastructure in tier 2 and 3 cities by establishing Urban Infrastructure Development Fund.

Unleashing the Potential Trust-Based Governance

The Union Budget 2023 also adopted Unleashing the Potential Trust-Based Governance as one of its priorities and attempted to take the following measures in this regard –

• Make AI in India and set up three specialized AI centres in educational institutions to enable AI-based solutions in health agriculture and sustainable cities.
• Introduce the National Data Governance Policy to enable access to anonymized data for research by academia and start-ups.

Vivad Se Vishwas 1

• with less stringent contract execution by MSME to provide relief to the MSME affected during the covid time

Vivad Se Vishwas 2 which focuses on an easier and standardized settlement scheme for the purpose

• of faster resolution of contractual disputes of the government and government undertakings
• Launch Phase 3 of E Courts to ensure effective management of justice
• Setting up the Entity Digi Locker for the use of charitable trusts and business enterprises in order to facilitate storing and sharing of documents securely with the business documents
• Setting up 100 labs for 5G services-based application development for tapping the employment and business opportunities
• R&D Grant for Lab Grown Diamonds LDG sector with the objective of encouraging domestic production and reducing the dependency on exports

Green Growth

The fifth priority of the Union Budget 2023 is

Green Growth focuses on the following

• Green Credit Programme, which shall be notified under FPA for incentivising sustainable actions
• Launching PM – PRANAM for incentivizing the states and UTs in order to promote the use of alternative fertilizers
• Taking up MISHTI for mangrove plantation along the coastline
• Implementing Amrit Dhanbar for optimal use of wetlands
• Establishing 500 new Waste to Wealth Plants under the GOBARdhan scheme for promoting a circular economy
• Setting up 10,000 bio input resource centres for facilitating farmers towards the adoption of natural farming
• Promoting Battery Energy storage systems
• Allocation of funds for the replacement of old polluting vehicles

Youth Power

Youth power, or Amrit Peedi is the 6th priority of the Union Budget 2023, which focuses on the following.

• Launching PMKVY4.0 for the purpose of covering new courses like robotics, coding, AI, #D painting etc
• Taking measures for the promotion of the tourism sector in the country by selecting at least 50 destinations via the challenge mode, which shall be developed as a complete package for the domestic and foreign tourists
• Encouraging the setup of unity malls for promoting One district One product handicraft and GI products

Financial Sector

This is the final priority of the Saptarishi of the Union Budget 2023, which deals with the below-mentioned aspects.

• Setting up National Financial Information Registry for enabling efficient lending, promoting financial inclusion and enhance financial stability
• Establishing Central data Processing Centre for handling the administrative work under the Companies Act faster

Expansion of the credit guarantee scheme for the MSME under a revamped scheme for enabling additional collateral-free guaranteed credit of 2 lakh crore

• A one-time new small saving scheme by the name of Mahina Samman Bachat Patra with a 2 yr period and a deposit facility of upto 2lakh for women.
• Certain benefits for senior citizens through enhanced maximum deposit limit for senior citizens saving scheme from 15 to 30 lakh.
• Creating more trained professionals in the securities market through awarding educational certificates.

Fiscal Management

Apart from the financial sector, fiscal management is also considered essential, and the following shall be done in respect of the same –

• 50yr Interest Loans to States will be spent on Capital Expenditure within 2023-24, and a part of this loan is conditional on states increasing capital expenditure, and parts of outlay shall be linked to states undertaking various reforms.
• A fiscal deficit of 3.5%of GSDP is allowed for states with 0.5% tied to Powers sector reforms.
• Target fiscal deficit to be below 4.5% by 2025-26.

Tax Proposals

New tax regime is the default tax regime. However, citizens can opt for the old tax regime. The tax slabs as per the new regime are provided below.

Income tax slabs under new tax regime	Income tax rates under new tax regime
O to Rs 3 lakh	0
Rs 3 lakh to Rs 6 lakh	5%
Rs 6 lakh to Rs 9 lakh	10%
Rs 9 lakh to Rs 12 lakh	15%
Rs 12 lakh to Rs 15 lakh	20%
Income above Rs 15 lakh	30%

• An individual having an annual income of Rs 9 lakh shall now be paying only Rs 45,000 in taxes:
• Income of Rs 15 lakh will fetch Rs 1.5 lakh tax, down from Rs 1.87 lakh
• Extending benefits of the standard tax deduction for salaried and pensioned

Payment received from Agniveer Corpus Fund by Agniveers shall be exempted

Tax exemption removed in insurance policies with premiums over Rs 5 lakh

• Goverment proposes to provide for TDS and taxability on the new regime.
• Tax exemption on leave encashment on the retirement of non-government salaried employees hiked to Rs 25 lakh which was 3 lakh earlier.
• A higher limit of for TDS on cash withdrawal ie Rs 3 crore
• is to be provided to cooperative societies.

Next-generation Common ITR Form to be rolled out for taxpayer convenience

• Grievance redressal mechanism to be strengthened
• TDS rate to be reduced from 30 % to 20 % on the taxable portion of EPF withdrawal in non-PAN cases.
• The rebate limit has been increased from 5lakh to 7 lakh
• The highest surcharge rate on income above 5 crs. is reduced from 37% to 25%
• The benefit of carry forward losses upon change of shareholding of start-ups from 7 to 10 years of incorporation
• Extension of period for tax benefits to funds that relocating to IFSC Gift City till 31st March 2025
• Extending the incorporation date by 1 year for income tax start-ups
• Deduction on payment made to MSME is only accepted when the payment is actually made
• Decriminalization under section 276A of the Income Tax Act.
• Allowing carry forward of losses on strategic disinvestment including that of IDBI Bank, 
• A 16% increase in the duty on cigarettes have been proposed.

Conclusion

The budget also discusses the funds allocated to various ministries and the amendment of various regulations. The union budget 2023 can provide much-needed relief to the middle-class taxpayer and encouragement to the startups. The 7 priorities adopted by the government can foster the nation’s growth.

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Read Our Article: An overview of the 2022 Budget