The Union Budget is one of the most awaited financial events in the country. Union Minister of Finance, Smt. Nirmala Sitharaman presented the first budget of Amrit Kaal before the parliament today. Key highlights of the same are mentioned below for your easy perusal:
Economic Survey: it is prepared by the Department of Economic Affairs (DEA) under the guidance of Chief Economic Advisor V Anantha Nageswaran.
GDP: India to remain the fastest-growing major economy in the world. India’s GDP growth is expected to remain robust at 7% in FY23 and thereafter 6.5% in FY24 (in real terms);
Domestic demand is solid. The government increased capital expenditure significantly;
India is the third largest economy in (purchasing power parity) terms, fifth largest in terms of exchange rate;
Borrowing costs may remain high for the near future;
Current Account Deficit may continue to widen as global commodity prices remain elevated;
Rupee may depreciate further if the FED hikes rates aggresively;
Electronics exports rise nearly threefold, from US $4.4 billion in FY19 to US $11.6 Billion in FY22;
The Gross Tax Revenue registered a YoY growth of 15.5 percent from April to November 2022, driven by robust growth in the direct taxes and GST;
Labor markets have recovered beyond pre-Covid levels, in both urban and rural areas, with unemployment rates falling from 5.8 percent in 2018-19 to 4.2 percent in 2020-21;
Credit to Micro, Small, and Medium Enterprises (MSMEs) has grown by an average of around 30% since January 2022 and credit to large industries has been showing double-digit growth since October 2022;
UPI-based transactions grew in value (121 percent) and volume (115 percent) terms, between 2019-22, paving the way for its international adoption;
India’s exports contracted by 12.2% to $34.48 billion in December 2022 due to the global demand slowdown. India’s export growth is likely to be flat in the next fiscal if the global economy does not pick up.
Tax and investment related provisions of the budget:
Individuals with an income of upto 7 lacs will not have to pay any tax under the new regime;
The tax slabs in the new regime have been reduced to five (from six);
The standard deduction for a salaried person having an income of 15.5 lac or more increased to 52,500 under the new regime;
The highest surcharge rate has been reduced from 37% to 25% under the new regime;
New Regime has been made the default tax regime but there is an option to pay taxes under the old regime as well;
Increase in tax exemption limit of leave encashment for non-government employees increased from 3 lacs to 25 lacs;
Presumptive taxation limit enhanced from 2 cr. & 50L to 3 cr. and 75L for businesses and professionals where tax receipts are not more than 5% of the total receipts;
The cooperative manufacturing unit will get the benefit of 15% tax rate if they commence manufacturing activities before 31.03.2024;
A limit of 10 cr. on deduction from capital gains on investment in residential property under sections 54 & 54F is introduced.
W.e.f. 1st April 2023, new insurance policies (excluding ULIPs as these are already taxable if the premium is above 2.5 lacs) with premiums above 5 lacs will be taxable;
A one-time new small savings scheme, Mahila Samman Savings Scheme will be available for a two-year period up to March 2025. Maximum investment of 2 lac in name of women or girls at a fixed rate of 7.5% can be made;
The senior citizen savings scheme limit has been increased from 15 lacs to 30 lacs;
The maximum limit for Monthly Income Account Scheme will be enhanced from 4.5 lacs to 9 lacs for single and from 9 lacs to 15 lacs for joint holders;
Relief in customs duty on import of certain mobile parts like camera lens and concessional duty on Lithium ion cells for batteries extended for another year;
Other key relevant highlights of the budget:
PM Garib Kalyan Anna Yojana is launched w.e.f. 1/1/2023 to supply free food grains to all antyodaya and priority households;
The agricultural credit target has been increased to 20L cr.
The outlay for PM Awas Yojana is being enhanced by 66% to over 79,000 cr.
A 10L cr. capex target for 2023-24 which is 33% higher than the budget estimate of 7.5L cr.
A capital outlay of 2.4L crore has been provided for the railways;
Three centers of excellence for Artificial Intelligence will be set up in top educational institutions;
48% rise in allocation towards renewable energy sector;
PM Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth within the next three years;
MSMEs will be provided a credit guarantee of 2L crore and a reduction in the cost of borrowing by 1%;
To enhance investors’ protection, the Banking Regulation Act, the Banking Companies Act and RBI Act are proposed;
Fully imported cars, including EVs to cost more;
Ministry of electronics and IT has received 16K cr. of allocation – double than what it was two years back;
An integrated IT portal will be set up to reclaim unclaimed shares and unclaimed dividends from the investor education and protection fund;
Our take on the budget:
The focus of the budget was primarily on seven sectors, including domestic manufacturing, infrastructure development, and green power. From agriculture to the digital economy, the Government is trying to lay a strong foundation in all the sectors for India’s multi-year growth. We are confident of India’s growth story and it becoming a $ 5 trillion economy by 2030 and $ 25 trillion by 2047.
However, India is one of the countries where the savings ratio is very low. Instead of promoting the habit of savings, the Government is trying to shift to the new regime wherein there are no major deductions available and at the same time, taxing underpenetrated investment products like equities, mutual funds, insurance etc.
One of the most neglected sectors, tourism, found its mention in the budget today. Setting up of 50 new airports and heliports is a welcome move. Overall the budget was growth-oriented, inclusive, and prudent.
Very well captured brief on the budget. It tries to cover all strata of society and should spur the growth. Savings should be incentivised more so that people become self reliant in the times of need and also make money available with the Govt. Overall Excellent budget