Table of Contents

Union Budget 2023-24 Analysis

Budget Highlights : Union Budget 2023-24 Analysis

Expenditure: Union Budget 2023-24 Analysis The government plans to spend Rs 45,03,097 crore in the fiscal year 2023-24, representing a 7.5% increase over the revised estimate of 2022-23. Additionally, in 2022-23, total expenditure is estimated to be 6.1% higher than the budget estimate.

Receipts: In the financial year 2023-24, receipts (excluding borrowings) are anticipated to amount to Rs 27,16,281 crore, marking an 11.7% increase over the revised estimate of 2022-23. Similarly, in 2022-23, total receipts (excluding borrowings) are projected to be 6.5% higher than the budget estimates.

GDP: The government has projected a nominal GDP growth rate of 10.5% for the fiscal year 2023-24, which includes both real growth and inflation.

Deficits: Union Budget 2023-24 Analysis The revenue deficit in 2023-24 is targeted to be 2.9% of GDP, which is lower than the revised estimate of 4.1% in 2022-23. Similarly, the fiscal deficit in 2023-24 is targeted to be 5.9% of GDP, lower than the revised estimate of 6.4% of GDP in 2022-23. Although the revised estimate as a percentage of GDP was the same as the budget estimate, in nominal terms, the fiscal deficit was higher by Rs 94,123 crore (an increase of 5.7%) in 2022-23. Interest expenditure, amounting to Rs 10,79,971 crore, is estimated to be 41% of revenue receipts.

Ministry allocations: Union Budget 2023-24 Analysis Among the top 13 ministries with the highest allocations, the most significant percentage increase in allocation for the fiscal year 2023-24 is observed in the Ministry of Railways (49%), followed by the Ministry of Jal Shakti (31%), and the Ministry of Road Transport and Highways (25%).

Main tax proposals in the Finance Bill

Changes in the new income tax regime: Union Budget 2023-24 Analysis Changes in the new income tax regime include reducing the number of tax slabs from six to five. Additionally, the surcharge on income exceeding Rs 5 crore will be reduced from 37% to 25%. The threshold for availing a rebate and not paying any taxes has been raised from Rs 5 lakh to Rs 7 lakh. Moreover, the standard deduction will be available under the new tax regime.

Here is the comparison of the current and proposed tax slabs in tabular format:

Tax Rate	Current Income Slab	Proposed Income Slab
Nil	Up to Rs 2.5 lakh	Up to Rs 3 lakh
5%	Rs 2.5 lakh to Rs 5 lakh	Rs 3 lakh to Rs 6 lakh
10%	Rs 5 lakh to Rs 7.5 lakh	Rs 6 lakh to Rs 9 lakh
15%	Rs 7.5 lakh to Rs 10 lakh	Rs 9 lakh to Rs 12 lakh
20%	Rs 10 lakh to Rs 12.5 lakh	Rs 12 lakh to Rs 15 lakh
25%	Rs 12.5 lakh to Rs 15 lakh	–
30%	Above Rs 15 lakh	Above Rs 15 lakh

Additionally, the surcharge on income exceeding Rs 5 crore will be reduced from 37% to 25%, and the rebate threshold for tax exemption has been increased from Rs 5 lakh to Rs 7 lakh. Union Budget 2023-24 Analysis Furthermore, the standard deduction will be available under the new tax regime.

Change in Tax Exemptions: The tax exemption for news agencies established solely for the collection and distribution of news will be eliminated.

From April 2023, charitable trusts will only be required to apply 85% of their income within the year to avail income tax exemption. Additionally, if a charitable trust donates to another charitable trust, only 85% of such a donation would be considered as the application of income.

Presumptive Taxation: The upper limit on turnover for Micro, Small, and Medium Enterprises (MSMEs) to qualify for presumptive taxation has been increased from Rs 2 crore to Rs 3 crore. Additionally, the upper limit on gross receipts for professionals eligible for presumptive taxation has been raised from Rs 50 lakh to Rs 75 lakh.

Co-operative Societies: The income tax rate for new co-operative societies involved in manufacturing activities has been reduced from 22% to 15%, with an additional 10% surcharge.

Capital Gains: Capital gains resulting from the sale of residential property can be deducted up to the extent of the purchase or construction of another residential property. However, this deduction will be capped at Rs 10 crore.

Life Insurance: Income generated from investments in life insurance policy

s will be subject to taxation if the premium of Rs 5 lakh or more has been paid in any given year. However, the amount received upon the death of the policyholder will remain exempt from income tax.

Online Games: Winnings from online games will be subject to a 30% tax deduction at the source.

Startups: Startups that meet certain conditions and are incorporated within a specified time period can deduct up to 100% of their profits. The deadline for this period has been extended from March 31, 2023, to March 31, 2024. Additionally, the duration for which losses of startups can be carried forward has been extended from seven to ten years.

Indirect Taxes: Customs duty on various items has been revised. For certain items such as gold, platinum, and aeroplanes, the cess amount has been raised while corresponding decreases in customs duties have been made.

CGST: The CGST Act will be amended to disallow input tax credit for goods and services acquired for use in activities related to corporate social responsibility.

Policy Highlights

Legislative Proposals: Union Budget 2023-24 Analysis Amendments will be introduced to the Banking Regulation Act, 1949, Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, and the Reserve Bank of India Act, 1934 to enhance bank governance and bolster investor confidence. Additionally, various measures will be implemented to facilitate business activities in the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC). For instance, amendments to the IFSC Authority Act, 2019 will be made to enable arbitration and ancillary services in GIFT IFSC, and to prevent dual regulation under the Special Economic Zones Act, 2005.

Infrastructure: The scheme offering 50-year interest-free loans to state governments will be extended to 2023-24, with a budget allocation of Rs 1.3 lakh crore. Additionally, 100 critical transport infrastructure projects aimed at enhancing last and first-mile connectivity for sectors like ports, coal, and steel will be undertaken. These projects will involve an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources.

Urban Development: An Urban Infrastructure Development Fund will be established to facilitate the development of urban infrastructure by public agencies in tier-2 and tier-3 cities. Managed by the National Housing Bank, the fund is expected to receive an annual allocation of Rs 10,000 crore. States and cities will be encouraged to implement urban planning reforms, including efficient land use and transit-oriented development. Additionally, cities will be incentivized to enhance their creditworthiness for municipal bonds through property tax reforms and the allocation of user charges.

Agriculture: An Agriculture Accelerator Fund will be established to foster agri-startups in rural areas. Additionally, a sub-scheme of the PM Matsya Sampada Yojana will be introduced with an investment of Rs 6,000 crore to support fishermen, fish vendors, and MSMEs. Decentralised storage capacity will be established for farmers to store their produce. Union Budget 2023-24 Analysis
Furthermore, the PM Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth (PM-PRANAM) will be launched to incentivize states/UTs to promote the balanced use of chemical fertilisers and alternative fertilisers.

Energy and Environment: Union Budget 2023-24 Analysis A Green Credit Programme will be established under the Environment (Protection) Act, 1986 to encourage environmentally sustainable practices by companies, individuals, and local bodies, and to mobilise additional resources for such initiatives. Union Budget 2023-24 Analysis Additionally, viability gap funding will be provided to support Battery Energy Storage Systems with a capacity of 4,000 MWh.

Research and Development (R&D): Union Budget 2023-24 Analysis Three centres of excellence for R&D in Artificial Intelligence will be established in selected educational institutions. Additionally, 100 labs will be established in engineering institutions to develop applications using 5G services. Furthermore, a National Data Governance Policy will be released to facilitate access to anonymized data. Moreover, a program to promote research and innovation in pharmaceuticals will be initiated through centres of excellence.

Health: Union Budget 2023-24 Analysis Nursing colleges will be established alongside all existing 157 medical colleges. Union Budget 2023-24 Analysis Additionally, a Mission will be launched to eradicate sickle cell anaemia by 2047, covering seven crore people in the age group of 0-40 in affected tribal areas.

Finance: Union Budget 2023-24 Analysis A National Finance Information Registry will be established to access all financial and ancillary information. Additionally, a small savings scheme called the Mahila Samman Savings Certificate will be introduced for a duration of two years. Furthermore, the deposit limit for the Senior Citizens Savings Scheme will be raised from Rs 15 lakh to Rs 30 lakh.

Governance: The Know Your Customer (KYC) process will be simplified, and financial sector regulators will be urged to implement a KYC system. Union Budget 2023-24 Analysis Additionally, a Unified Filing Process will be established for submitting information to various government agencies. Furthermore, a Voluntary Settlement Scheme will be introduced to resolve contractual disputes involving the government and its undertakings. Moreover, the financing system of certain schemes will be transitioned from input-based to result-based on a pilot basis.

Sources : https://www.india.gov.in/spotlight/union-budget-2023-2024

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