The 2023-2024 Union Budget announcement by Finance Minister Nirmala Sitharaman saw some major changes - especially in taxation - with strong incentives provided to push tax payers to the new tax regime.
Furthermore, the finance minister outlined seven priorities in the budget announcement: inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector.
Here are the top takeaways from her speech:
1. Taxation
Sitharaman announced some major changes to existing tax structure, with increased rebate for tax payers, under the new tax regime - which she announced would now be the default tax regime.
a. Tax exemption limit, which is currently at Rs. 5 lakh per annum, is to be increased to Rs. 7 lakh per annum, under the new tax regime.
b. Personal income tax regime reduced from six income slabs to five income slabs. The new tax rates are as follows (in INR):
| 0 - 3 lakh | nil |
| 3 - 6 lakh | 5 per cent |
| 6 - 9 lakh | 10 per cent |
| 9 - 12 lakh | 15 per cent |
| 12 - 15 lakh | 20 per cent |
| Above 15 lakh | 30 per cent |
c. Benefit of standard deduction to be extended to the new tax regime.
d. Highest surcharge rate to be reduced from 37 per cent to 25 per cent, thus bringing down the highest tax rate from 42.8 per cent to 39 per cent.
e. Limit of Rs. 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees increased to Rs. 25 lakh.
f. Reduction of basic customs duty on seeds used in the manufacture of Lab Grown Diamonds (LGDs).
g. National Calamity Contingent Duty on specified cigarettes increase to 16 per cent.
2. Fiscal Management And Revised Estimates
a. States to be allowed a fiscal deficit of 3.5 per cent of GSDP, 0.5 per cent of which will be tied to power sector reforms.
b. Fiscal deficit estimated to be 5.9 per cent of GDP. Government plans to continue towards fiscal consolidation, with the aim of reaching a fiscal deficit below 4.5 per cent by 2025-26.
"We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26," Sitharaman said.
c. Fifty-year loan to states to be spent on capital expenditure within 2023-2024. Expenditure will be done at the discretion of states, with parts of the outlay to be linked to or allocated for the following:
• Scrapping old government vehicles,
• Urban planning reforms and actions,
• Financing reforms in urban local bodies to make them creditworthy for municipal bonds,
• Housing for police personnel above or as part of police stations,
• Constructing Unity Malls,
• Children and adolescents’ libraries and digital infrastructure, and
• State share of capital expenditure of central schemes.
3. Infrastructure and Investment
a. Capital investment outlay increased by 33 per cent to Rs. 10 lakh crore, or 3.3 per cent of GDP. This marks an increase of the outlay by threefold since 2019-2020.
b. Effective Capital Expenditure of the Centre to be budgeted at Rs. 13.7 lakh crore, or 4.5 per cent of GDP.
c. Capital outlay of Rs. 2.4 lakh crore provided for the Railways.
d. Fifty additional airports, heliports, water aerodromes and advanced landing grounds to be revived for improved regional air connectivity
e. Rs. 10,000 crore per annum to be made available for the purpose of Urban Infrastructure Development Fund, for the creation of urban infrastructure in Tier 2 and Tier 3 cities.
4. Health, Education & Skilling
a. 157 new nursing colleges to be established in co-location with existing 157 medication colleges established since 2014.
b. Mission to eliminate Sickle Cell Anemia by 2047 to be launched, which will entail awareness creation, universal screening of 7 crore individuals of age group 0-40 years in affected tribal areas.
c. Selected ICMR labs to be provided with facilities for research by public and private medical college faculty and private sector research and development teams.
d. National Digital Library to be set up for children and adolescents for availabilities of books across languages and levels, with device agnostic accessibility. States are to be encouraged to set up physical libraries at panchayat and ward levels.
e. National Book Trust, Children's Book Trust and other resourced to be encouraged to provide and replenish non-curricular titles in English and regional languages to make up for reading loss during the COVID-19 pandemic.
5. Agriculture And Cooperation
a. Agriculture Accelarator Fund to be set-up to encourage agri-startups in rural areas.
b. An outlay of Rs. 2,200 crore announced for the Atmanirbhar Clean Plant Program for boosting availability of quality planting material for high value horticultural crops.
c. The finance minister also announced a push for popularising millets, which she dubbed as "Shree Anna".
"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," she said.
d. A sub-scheme of PM Matsya Sampada Yojana to to be launched with targeted investment of Rs. 6,000 crore to enable activities of fisherman and fish vendors.
6. Energy - Transition To Green
a. Sitharaman, while talking of the recently launched National Green Hydrogen Mission, announced an annual production of 5 MMT by 2030.
b. Rs. 35,000 crore allocated for priority capital investments for energy transition and net zero objectives.
c. Battery Energy Storage System with capacity of 4,000 MWH to be supported with Viability Gap Funding.
d. PM-PRANAM - "PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth" to be launched to incentivize states and Union Territories to promote alternative fertilizers.
e. GOBARdhan Scheme (Galvanizing Organic Bio-Agro Resources Dhan) to be established for promotion of circular economy, which shall include 200 compressed biogas plants, with 75 plans in urban areas and 300 community or cluster based plants.
7. Tourism
a. 50 selected tourist destinations will be selected and developed, with an app made available to enhance tourist experience.
b. "Dekho Apna Desh" initiative was also announced by Sitharaman, to boost domestic tourism, while she also announced the launching of "Swadesh Darshan Scheme", to promote domestic tourism over international tourism.
8. Finance
a. Credit guarantee scheme for MSMEs to be revamped from April 1, 2023, through infusion of Rs. 9,000 crores, enabling collateral-free guarantied credit of Rs. 2 lakh crore, while the cost of credit will be reduced by 1 per cent.
b. The setting up of a national financial information registry was also announced, which shall serve as a central repository of financial and ancillary information.
c. Measures to be taken to enhance business activities in the Gujarat International Finance Tech-city (GIFT) International Financial Services Centre (IFSC) under the Special Economic Zone Act (SEZ).
d. Data Embassies to be set up in GIFT IFSC.
9. Technology
a. Phase-3 of the E-Courts project will be launched with an outlay of Rs. 7,000 crore.
b. Entity DigiLocker to be set up for use by MSMEs, large business and charitable trusts.
c. 100 labs to be set up for developing applications using 5G services in engineering institutions.
d. R&D grant to be provided to one of the IITs for five years for development of Lab Grown Diamonds.