Budget 2023-2024: Highlights

Introduction

Honourable Finance Minister, Smt Nirmala Sitaraman, has presented the Annual Budget for the Financial Year 2023 – 2024 in the Parliament today i.e. 1st February, 2023. Following 75^th anniversary of independence, the first budget in Amrit Kaal is introduced in furtherance of the blueprint drawn for India@100.

Focus and priorities

The economic agenda for achieving this vision focuses on three things: first, facilitating ample opportunities for citizens, especially the youth, to fulfil their aspirations; second, providing strong impetus to growth and job creation; and third, strengthening macro-economic stability.

The Budget adopts the following seven priorities. They complement each other and act as the ‘Saptarishi’ guiding us through the Amrit Kaal.

1) Inclusive Development

2) Reaching the Last Mile

3) Infrastructure and Investment

4) Unleashing the Potential

5) Green Growth

6) Youth Power

7) Financial Sector

Achievements

India has achieved an estimated economic growth rate of 7% and the economy is in the process of recovery from the hardships of the pandemic. The following schemes were implemented through the budgets of the previous decade:

11. 7 crore household toilets under Swachh Bharat Mission,
12. 9.6 crore LPG connections under Ujjwala Yojana scheme
13. 220 crore Covid vaccination of 102 crore persons,
14. 8 crore PM Jan Dhan bank accounts,
15. Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana, and
16. Cash transfer of 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
17. Deendayal Antyodaya Yojana National Rural Livelihood Mission has mobilized rural women into 81 lakh Self Help Groups.
18. PM Vishwakarma Kaushal Samman. (PM VIKAS) has integrated artisans and craftspeople with the MSME value chain.
19. For enhancing ease of doing business, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalized.

Expenditure

Agriculture

• An Agriculture Accelerator Fund will be set-up to encourage agricultural start-ups by young entrepreneurs in rural areas.
• The agriculture credit target will be increased to ` 20 lakh crore with focus on animal husbandry, dairy and fisheries.
• Government will implement a plan to set up massive decentralised storage capacity.
• An Atmanirbhar Clean Plant Program will be initiated to boost availability of disease-free, quality planting material for high value horticultural crops at an outlay of 2,200 crore.
• 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.
• Model bye-laws for Primary Agricultural Credit Societies (PACS) will be formulated enabling them to become multipurpose PACS.
• A national cooperative database will be prepared for country-wide mapping of cooperative societies.

Healthcare

• One hundred and fifty-seven new nursing colleges will be established.
• Facilities in select ICMR Labs will be made available for research by public and private medical college faculty and private sector R&D teams.
• Three centres of excellence for Artificial Intelligence will be set-up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research, develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities.

Education

• The District Institutes of Education and Training will be developed for teacher’s training.
• A National Digital Library for children and adolescents will be set-up.
• Centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students.
• 30 Skill India International Centres will be set up across different States.
• A unified Skill India Digital platform will be launched.

Welfare

• For poor persons who are in prisons and unable to afford the penalty or the bail amount, required financial support will be provided.
• In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings.
• To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced.
• A Green Credit Programme will be notified under the Environment (Protection) Act. This will incentivize environmentally sustainable and responsive actions by companies, individuals and local bodies.

Infrastructure

• Infrastructure Finance Secretariat will be established to assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power.
• One hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, and steel, fertilizer, and food grains sectors have been identified. They will be taken up on priority with investment of 75,000 crore, including 15,000 crore from private sources.
• Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall. This 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.
• Coastal shipping will be promoted.
• Railways capex outlay hiked to Rs.2.40 lakh crore.
• 400-600 new semi high speed Vande Bharat trains to be launched replacing Shatabdi and Rajdhani Express.
• 2. 50 additional airports, heliports, water aero drones to be set up.

Information Technology

1. A National Data Governance Policy will be brought out.
2. Phase-3 of the E-Courts project will be launched with an outlay of ` 7,000 crore.
3. Entity Digi Locker will be set up for use by MSMEs, large business and charitable trusts. This will be towards storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.

Finance

• The KYC process by finance companies will be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach. The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India.
• To enable more Fintech innovative services, the scope of documents available in Digi Locker for individuals will be expanded.
• Additional collateral-free guaranteed credit of ` 2 lakh crore shall be extended to MSMEs. Further, the cost of the credit will be reduced by about 1 per cent.
• A national financial information registry will be set up to serve as the central repository of financial and ancillary information.
• To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.
• Deposit facility up to 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option shall be introduced.
• The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from 15 lakh to 30 lakh. The maximum deposit limit for Monthly Income Account Scheme will be enhanced from 4.5 lakh to 9 lakh for single account and from 9 lakh to 15 lakh for joint account.

Ease of doing business

• The PAN will be used as the common identifier for all digital systems of specified government agencies.
• A system of ‘Unified Filing Process’ will be set-up. Such filing of information or return in simplified forms on a common portal, will be shared with other agencies as per filer’s choice.
• For furthering the trust-based governance, government shall introduce the Jan Vishwas Bill to amend 42 Central Acts.

Corporate

• A Central Processing Centre will be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
• SEBI will 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.
• To enhance business activities in GIFT IFSC, the following measures to be taken.

1. Delegating powers under the SEZ Act to IFSCA to avoid dual regulation.
2. Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI.
3. Permitting acquisition financing by IFSC Banking Units of foreign bank.
4. Establishing a subsidiary of EXIM Bank for trade re-financing.
5. Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act.
6. Recognizing offshore derivative instruments as valid contracts.

Revenue

Indirect Tax

• 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, to 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).

Direct Tax

• Micro enterprises with turnover up to 2 crore and certain professionals with turnover of up to 50 lakh can avail the benefit of presumptive taxation.
• Extension of date of incorporation for income tax benefits to start-ups from 31.03.23 to 31.3.24. The benefit of carry forward of losses on change of shareholding of start-ups shall be availed for ten years instead of seven years of incorporation.
• Centre to deploy about 100 Joint Commissioners for disposal of small income tax related appeals.
• Removing the minimum threshold of 10,000/- for TDS.
• Decriminalisation under section 276A of the Income Tax Act.
• Persons in the new tax regime, with income up to 7 lakh will not have to pay any tax.
• A salaried class and the pensioners including family pensioners shall avail benefit of 34 standard deduction to the new tax regime. Each salaried person with an income of 15.5 lakh or more will thus stand to benefit by 52,500
• Reduces the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime
• The new income tax regime shall be the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.

New tax rates:

1. 0-3 lakh: Nil
2. 3-6 lakh: 5 per cent
3. 6-9 lakh: 10 per cent
4. 9-12 lakh: 15 per cent
5. 12-15 lakh: 20 per cent
6. Above 15 lakh: 30 per cent

Response

The budget has been welcomed by corporate entities and businesses for promotion and ease of doing business, relaxation and simplification of compliance requirements and promotion of e-governance.. The middle class has responded positively to the new income tax regime.

The budget has been criticized for lack of focus on MGNREGA, inflation, price hikes of petroleum products and the depreciation of the rupee.

Authors:

Alby Stephan. K, Legal Executive at Legality Simplified.

Samvardhini S