CAC Budget Highlights

Preface

The Honorable Finance Minister Smt. Nirmala Sitharaman has presented Union Budget 2023 which is her 5th budget in a row and the last full budget of the BJP-led NDA government, ahead of the general elections in 2024. This year's budget marks Amrit Kaal's debut.

Vision of Amrit Kaal:

The vision entails and urged a knowledge-based, technology-driven economy with sound public finances and a thriving financial sector. This "JANBHAGIDARI" must be attained through "SABKA SAATH, SABKA PRAYAAS".

3 main goals for achieving this vision are creating many possibilities for people (specially young people) to realize their potential; strongly promoting growth and job creation; and enhancing macroeconomic stability.

FINMIN highlighted that to serve these focal areas on our path to India@100, there are four main opportunities that can be impactful: Economic Empowerment of Women, PM Vishwakarma Kaushal Samman (PM VIKAS), Tourism and Green Growth.

Since 2014, the government's efforts have ensured that all citizens live better and more dignified lives. During these years, the per capita income has more than doubled to Rs 1.97 lakh. According to FINMIN, the Indian economy has grown over the past nine years, moving it up to the fifth largest in the world from the tenth. Indiaâ€™s economic growth is estimated at 7% this year.

The main objective of this budget is the creation of jobs and youth upliftment. The FINMIN mentioned that the budget is built around 7 priorities (Saptarishi):

Inclusive development
Reaching the last mile
Infrastructure and investment
Unleashing the potential
Green growth
Youth power
Financial sector

Further, FINMIN highlighted that we have made great strides in achieving many Sustainable Development Goals (SDGs). The National Rural Livelihood Mission has mobilized rural women into 1 lakh Self Help Groups (SHGs) with exceptional success. Let us take a look at the sectoral highlights in the ensuing pages.

Sectorial Highlights

Agriculture and farmersâ€™ welfare

Agricultural accelerator fund to be setup to support young rural entrepreneurs' agritech startups.
Agri Accelerator Fund help young entrepreneurs navigate government regulations and connect all stakeholders in farm supply chain and network.
With an investment of Rs 2,516 crore, the government has also started the digitalization of 63,000 primary agricultural credit societies.
Government will introduce a sub-scheme under PM Matsya Sampada Yojana with an outlay of Rs 6,000 crore to further help those involved in fisheries.
Focus on rural economy including women economic empowerment, farmers, agri start-ups, etc.
From policy perspective, distributional benefits of higher agriculture production hinge on minimizing post-harvest losses via improved warehousing facilities.
More storage facilities help farmers bring the produce to mandis in a staggered manner, and support their profitability.
Massive decentralised storage capacity to help farmers store produce and realise reasonable prices.
One crore farmers will get assistance to adopt natural farming. 10,000 bio input resource centres will be set up.
Economic empowerment of women, formation of large producers enterprises, handicrafts in rural areas, push rural consumption.
Around 2 lakh crore to be borne by Centre to ensure Food security.
Agri credit enhanced to 20 lakh crore.
Government to spend Rs 2200 crore for high-value horticulture.
Made cash transfer of Rs 2.2 lakh crore under PM-KISAN scheme.

Social sector:

Outlay for Capex increased- by 33% to Rs 10 lakh crore which would be 3.3% of GDP.
Enhance ease of doing business- "More than 39,000 compliances have been reduced and more than 3,400 legal provisions have been de-criminalised.
National Data Governance policy will be introduced.
Centre's focus on artificial intelligence - 3 centres of excellence for AI to enable 'Make AI for India' and 'Make AI work for India'.
Indiaâ€™s cotton productivity is 40% lower than the global average. Cluster-based, value-chain approach for extra-long staple cotton under PPP will improve productivity and exports.
47.8 crore Jan Dhan accounts opened.
The government will launch Pradhan Mantri Kaushal Vikas Yojana 4.0
PM Pranam to be launched to incentivise states and UTs to use alternative fertilisers.
66% increase in allocation for PM Awaas Yojana to Rs 79,000 crore will be for commercial vehicles and tractors used for moving materials for construction.
Rs 35,000 crore for energy transition.
States to be allowed 3.5% of GDP as fiscal deficit.
Govt to implement scheme for free foodgrains for 1 year.

Education

Education for knowledge-driven economy.
Government set up a nationwide children's and teen digital library.
157 new nursing colleges established in colocation.
157 medical colleges established since 2014.
Recruiting 38,800 teachers and support staff for 740 schools serving 3.5 lakh tribal students in next 3 years at Eklavaya Model Residential Schools.

Health

New program for pharmaceuticals formulated and investment in research would be encouraged.
100 new labs to be setup.
Government will start a mission to end sickle cell anemia by 2047.

Infrastructure and Defence

Inclusive development, infrastructure focus, prioritizing green growth, financial sector.
100% mechanical de-sludging of septic tanks & sewers to transition from manhole to machine hole mode.
100 critical transport infrastructure projects have been identified for implementation.
Railway outlay at Rs 2.4 lakh crore.
Data Governance Policy, Centres of Excellence on AI, Green Growth, the conventional thrust areas of infrastructure has also received a big boost.
Capital outlay of Rs 2.40 lakh crore for railways.
Investment of 75,000 crore focusing on freight.
50 additional airports, helipads, water aero drones, advanced landing grounds will be revived.
Railways, highways, urban, power, aviation ministries are expected to garner the lionâ€™s share of the capex allocation of Rs 10 lakh crore.
33% increase in capital investment outlay using gross budgetary support, and grants of Rs 3.7 lakh crore.
Capex support from the budget rises to 4.5% of GDP for the next fiscal from sub-4% this fiscal and sub-3% in fiscal 2020.

Banking

Federal lending- 50-year interest free loans continue for states.
Aadhar, PAN used for unified filing system, and KYC data norms eased.
KYC process will be simplified.
Capital investment outlay is being increased for third year in a row to Rs 10 lakh crore.

MSME incentives

Revamped Credit guarantee scheme for MSMEs- Revamping of credit guarantee scheme for MSMEs with Rs 9000 cr infusion would insulate them from rising interest rate burden.

Tourism

SABKA SAATH SABKA PRAYAAS focus on capacity creation in agriculture, food processing, animal husbandry, and tourism.
50 tourist destinations identified on competition basis to promote tourism.
50 tourist destinations selected through challenge mode to be developed as a whole package for domestic and international tourism.
Promotion of tourism will be taken up on mission mode.
Large potential for tourism especially youth to be taken up on mission mode.
The country offers immense attraction for domestic as well as foreign tourists. sector holds huge opportunities for jobs and entrepreneurship for youth.

Green Growth:

Target to reach green hydrogen production of 5 MMT by 2030.
9.5% compressed bio gas mandate for marketers should drive faster adoption.
Infrastructure incentives are expected given green energy as priority.
Viability gap funding for battery storage, renewable energy evacuation, green credit policy and incentives for further growth are strong initiatives to support green growth and achieve net zero mission by 2070.

Growth and Job creation

In next 3 years, government will employ 38,800 teachers and support staff for 740 Eklavya model schools supporting tribal students.
EPFO membership doubled to 7 crores reflects increased employment.
Infrastructure incentives are expected given green energy as priority.
Direct Benefit Transfer scheme for youths- To provide support to 47 lakh youths in 3 years.

Miscellaneous:

Higher capex allocation will support the commercial vehicles industry.
PAN will be used for common identifier for all digital systems of specified government agencies. need to see alternative for non-resident businesses as they would not have PAN.
Phase-III of e-courts will be launched.
Reduction in compliance and relaxation of regulatory provisions.
Dispute resolution scheme under Vivad Se Vishwas-2 to settle commercial disputes.
30 Skill India international centres will be set up across states.
Customs duty on lab grown diamonds to be reduced.
Gold, silver and diamonds to get expensive.
Adequate funding to scrap old government vehicles and ambulances will be marginally positive for SCV buses and other vehicle categories.
Creation of decentralized storage capacity and catalyst for increasing farmers returns.
Regulators and regulated entities will be established using Digi Locker service and Aadhaar as foundational identity.
New MISHTI scheme- Govt to take up mangrove plantation along the coastline.
Digital Transformation.
Digital NATION continues; use of Digi Locker and Aadhar to establish personal identities will smoothen current KYC hurdles.
Integrated IT portal will be set up for reclaiming unclaimed shares and dividends.
Powers under SEZ law.
Decarbonization- Replicating Green Hydrogen scheme to include more similar sectors, such as steel, shipping, fertilisers, etc.
Center of Excellence for Millets.
Customs on kitchen chimneys to go down.
Cigarettes will get more expensive.
Digital infrastructure and Covid vaccinations helped India stay on track.
Per capita income has more than doubled to Rs 1.97 lakh. In these 9 years and has increased in size from 10th to 5th largest in the world.
Facilitate opportunities for citizens especially youth, strong impetus to growth and job creation and strengthening macro economic situations has been the focus.
Our digital infrastructure is unmatched.
Made significant progress in many Sustainable Development Goals (SDGs).
Amrit Kaal includes a technology-driven and knowledge-based economy, with strong public finances and a robust financial sector.
Seven priorities - saptarishi - guiding us through Amrit Kaal. Among these, Inclusive development, green growth, youth power and financial power.
Focus on fulfilling youth aspirations, job creation and macroeconomic stability from an economics perspective.
National Rural Livelihood Mission has achieved remarkable success by mobilising rural women into 1 lakh SHGs.
9.6 crore LPG connections, 220 crore Covid vaccination for 102 crore people given, 47.8 crore JanDhan accounts opened.
India's per capita income has increased to Rs 1.97 lakh crore.
PM Azaz Yojana is being increased by 66% to over Rs 79,000 crore.
Sabka saath sabka prayaas focus on capacity creation in agriculture, food processing, animal husbandry, and tourism.

Direct Taxation Highlights

Income tax department has processed more than 6.5 crores ITRs this year, with average processing period reduced from 93 days (in FY13-14) to 16 days now and 45% of the ITRs had been processed within 24 hours.

With the continuous aim to reduce the compliance burden, promote entrepreneurial spirit, strengthen grievance redressal mechanism and provide tax relief to citizens, the budget has proposed the following changes:

Next-generation common Income Tax Return form has been proposed for tax-payer convenience.
Standard deduction benefits to be extended to new tax regime for salaried class and pensioners.
The highest rate of surcharge to be reduced from 37% to 25% in the new tax regime. Accordingly, maximum rate of tax to be reduced from 42.74% to 39%.
Income limit for claiming the benefit of Rebate u/s 87A to be increased from Rs 5 lakhs to Rs 7 lakhs in case of new tax regime.
Major relief provided to all taxpayers in new tax regime with changed slab rates as under:
- 0-3 lakhs : Nil
- 3-6 lakhs : 5%
- 6-9 lakhs : 10%
- 9-12 lakhs : 15%
- 12-15 lakhs : 20%
- above 15 lakhs : 30%.
The new tax regime to be now default tax regime. Assessees can still avail benefits under old tax regime on opt-out basis.
Tax exemption limit for leave encashment on retirement for non-government employees to be increased from Rs 3 lakhs to Rs 25 lakhs, when the highest basic pay in the government was 30,000 p.m.
Deduction from capital gains on investment in residential house under sections 54 and 54F capped to 10 crore.
Conversion of physical gold into virtual gold and vice versa not to be covered under Capital Gain transactions.
Similar limit is proposed for income tax exemption from proceeds of insurance policies with very high value.
Taxation on income from Market Linked Debentures to be rationalized.
Removal of minimum threshold of 10,000 for TDS and clarifying taxability relating to online gaming.
TDS rate reduced from 30% to 20% on taxable portion of EPF withdrawal in non-PAN cases.
Limit for deduction of TDS on cash withdrawal for co-operative societies to be extended to Rs 3 crores.
Limits for presumptive taxation for MSMEs to be increased from Rs 2 crores to Rs 3 crores (Business) and from Rs 50 lakhs to Rs 75 lakhs (Profession), where 95% of the receipts are non-cash.
Deductions of expenses for payments to MSMEs to be allowed only when payment is actually made.
Time limit for date for incorporation to be extended for claiming tax benefits in case of startups till 31st March 2024.
Limit for carry forward of losses for Startups in case of change in shareholding increased from 7 years from the date of incorporation to 10 years.
Extending 15% tax rate to new co-operatives commencing manufacturing till 31st March 2024.
Higher limit of Rs 2 lakhs per member is introduced for deposits and loans in cash by Primary Agricultural Credit Society (PACS) and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).
Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31st March 2025.
100 Joint Commissioners to be allotted for hearing pending appeals at Commissioner of Income Tax (Appeals) level.
Provisions of Section 276A of the Income Tax Act to be decriminalized.
Income of authorities, boards and commissions set up by statutes of Union/State to be exempted from income tax in prescribed cases.
Carry forward of losses on strategic disinvestment including that of IDBI Bank to be allowed.
EEE status to Agniveer Fund to be provided.

Indirect Taxation Highlights

Gross GST collection 156,000 crores in Jan 2023, breaching earlier 2nd highest record of October 2022.
Custom duty exemptions are to be provided for the manufacturing of lithium-ion batteries.
Basic custom duty rates to be reduced from 21 to 13 except for textiles.
To promote Electronics manufacture- relief on customs duty for camera lens and lithium batteries.
Marine Products- to promote exports - shrimps, etc. Duty on shrimp feed reduced.
Basic Customs duty reduced for seeds in manufacture for diamonds.
Benefits for ethanol blending program and acid program and epichlorohydrin.
Electric kitchen chimney to reduce inverted duty structure from 7.5 to 15 percent.
Steel - concessional customs duty on steel and ferrous products.
Concessional customs duty on copper and rubber.