Union Finance Minister Nirmala Sitharaman presented the Union budget for the financial year 2023-24 on February 1, 2023. It is a noteworthy announcement since this is the government’s last full-fledged budget announcement before the next general elections of 2024. Therefore, this budget is both economically and politically significant in a sense.
Last year saw elevated inflation levels well above the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, softening global demand and recession in several Western economies. In light of all these events, our finance minister presented a fiscally prudent and high-growth potential budget. Let’s discuss some of the most important announcements made in this budget.
What is Saptarishi of Union Budget 2023?
Saptarishi or the seven priorities mentioned in the Union budget are the following:
- Yuva Shakti or youth power
- Green growth
- Financial sector
- Infrastructure and investment
- Inclusive development
- Reaching the last mile
- Unleashing potential of India
To read more about each of these priorities, read more here.
Key Highlights of Union Budget 2023
This budget had something for every sector. The government formulated this budget keeping the internal and external macroeconomic conditions in mind. Let’s start with major announcements in the taxation sphere:
- From the financial year 2023-24, the new tax regime will become the default tax system. However, taxpayers can also choose to pay taxes and get assessed under the old tax regime by choosing the same while filing their Income Tax Returns (ITR).
- Individuals with income below ₹7.5 lakh (including ₹50,000 standard deduction) will not have to pay any income tax under the new tax regime. This has been done by introducing tax rebates for income of up to ₹7 lakh for taxpayers paying taxes under the new tax regime.
- Moreover, the government has also altered income tax slabs under new tax regimes. Starting April, 2023 the modified income tax slabs which shall be applicable for FY 2023-24 are as follows:
|Income Tax Slab||Tax Rate|
|Up to ₹3 lakh||0%|
|Above ₹3 lakh – ₹6 lakh||5%|
|Above ₹6 lakh – ₹9 lakh||10%|
|Above ₹9 lakh – ₹12 lakh||15%|
|Above ₹12 lakh – ₹15 lakh||20%|
|Above ₹15 lakh||30%|
- Individuals with an annual income of more than ₹5 crore have also greatly benefited from the surcharge reduction. The government has reduced the surcharge from 37% to 25%, bringing their tax rate from 42.7% to 39%.
- Presumptive taxation limits for small businesses have been increased from Rs.2 crore to Rs.3 crore, whereas for professionals like doctors, engineers and lawyers the limits have been revised from Rs.50 lakhs to Rs.75 lakhs. The underlying condition is to process 95% receipts via online channels to avail this benefit.
- Another step towards simplification of the filing process is the introduction of a unified filing process whereby the same information needn’t be filed with different government departments. One can voluntarily share information with other government departments via a common portal..
Now that you are well aware of the tax that you are most likely to pay in the coming year, let’s shift our attention to things that will become expensive and things that will become cheaper.
These Things Are Set To Become Costlier:
- Imitation jewellery
- Items made from gold bars
- Imported electric vehicles and luxury cars
- Imported kitchen chimney
Things That Are Set To Become Cheaper
- Mobile phones
- Lab grown diamonds
- Lithium ion cells for batteries used for various purposes including electric vehicles
- Camera lens
Boost to The Infrastructure Sector
The next thing to look out for is the infrastructure sector and major announcements made in that regard.
- This budget’s total outlay for capital expenditure is ₹10 lakh crore, representing 3.3% of the total GDP.
- Railways have received a record allocation of ₹2.4 lakh crore. This record allocation will go a long way in developing a modern, sustainable, citizen-friendly railway network.
- The Urban Infrastructure Development Fund is a new distinct fund.
- The main objective is to develop infrastructure and boost the ease of living for citizens of tier II and tier III cities.
What Are the Vision and Aims of the Union Budget 2023?
The Government of India presented the Union Budget to improve the lives of every citizen and keep India on the path of higher economic growth. Some of the major aims of this budget are as follows:
- To continue the movement of women’s empowerment by making them financially independent.
- To facilitate opportunities for our citizens, especially the Yuva shakti.
- To strengthen the macroeconomic framework of our country.
- To give a strong impetus to economic growth and subsequent job creation.
- To help the self-help groups actively participate in the nation-building process and take India’s growth trajectory to a new level.
Union Budget 2023 is a futuristic and growth-oriented budget with a special emphasis on middle-class and salaried individuals. Apart from this, the government has continued its focus on the infrastructure sector and its positive multiplier impact in all sectors of the economy.
The main idea behind this budget is to reach the last person standing in the queue, i.e., ‘Antyodaya’ and focus on ease of doing business and ease of living simultaneously.
Frequently Asked Questions (FAQs)
What is the National Hydrogen Mission in Budget 2023?
The Government of India has introduced a National Hydrogen Mission to transition towards a green future and phase out polluting fossil fuels. The Union Budget has provided a total outlay of ₹19,700 crores for this mission. One major feature of this programme will be to run hydrogen-based trains across tourist circuits in India.
What is the estimated GDP growth according to the Union Budget 2023?
As per the budget estimates, the nominal GDP of India during the financial year will be 10.5%. Therefore, the GDP growth in the fiscal year 2023-24 is between 6 %- 6.8%
What is the fiscal deficit target in budget 2023-24?
As per budget estimates, the fiscal deficit would stand at 5.9% of the GDP in the financial year 2023-24. However, with fiscal consolidation the government intends to bring down the fiscal deficit to 4.5% of the GDP, as mentioned in budget 2023.
What will be the estimated outstanding liability of the Centre for the financial year 2023-24?
The total internal and external debt of the Union Government, including other liabilities for the upcoming fiscal year, is estimated to be ₹169 lakh crore according to the Union Budget 2023.
Ramya is a qualified lawyer with experience in both public policy and finance. She completed her B.A.LL.B (Hons.) from NALSAR University of Law, Hyderabad and is a registered advocate with the Bar Council of India. She is currently working in the Legal and Compliance department of Wint Wealth, and has previously worked closely with the Department of Economic Affairs, Ministry of Finance and ICICI Bank Ltd, Mumbai.