Union Budget 2023 Key Highlights: Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 on February 1 which had a greater emphasis on the rural sector, social sector schemes, infrastructure creation, and the middle class.
The Budget for 2023-24 kept its focus on expanding Capex showing that the Modi government’s priorities are building roads, highways, and railway lines. The middle class has been given some relief in terms of tweaks in the new income tax regime clearly pointing out that the government wants a shift towards the new regime from the older one. The FM stuck to the fiscal deficit roadmap in the Budget with a target of 5.9% in FY 24 and adhering to the target for the current year. This is a positive considering a bloated deficit will have caused worries about finding the gap.
“This is the first budget in Amrit kaal, it hopes to build on the foundation laid by the previous budget and the blueprint drawn for India at 100,” Sitharaman said. During her budget speech, the finance minister said the focus remains on widening the scope of economic growth, boosting key areas like infrastructure and manufacturing and job creation.
Impact NRI Taxpayers & Investors The introduction of the digital rupee might benefit NRIs in reducing the cost of cross-border remittances. E-passports with the embedded chip will help in managing arrival and departure with ease. The chip will help in linkages of data with the Indian Ministry of External Affairs and tax authorities.
The budget proposes to reduce the rate of TDS on payment of dividends to NRI by any person other than a company u/s 196A of the IT Act. The current rate of TDS is 20% at the time of the payment of such mutual fund income to non-residents.
A new NRI tax regime has been introduced, under which income tax rebate limit has been increased to Rs. 7 lakh from Rs. 5 lakh, which means now you don’t have to pay tax for income up to Rs. 7 lakh a year.
The rate of TCS for foreign remittance for education and medical treatment will continue to be 5 per cent for remittance exceeding Rs. 7 lakh. Likewise, TCS rate on foreign remittance for education purposes through a loan will also continue to be 0.5 per cent an amount exceeding Rs. 7 lakh.
However, the rate of TCS for foreign remittance for other purposes under LRS and purchase of overseas trips has been increased from 5 per cent to 20 per cent.
New income tax slabs and rates for NRIs
Income Tax Slab New Regime Slab Rate Rs. 3.00 lakh to Rs. 6.00 lakh 5% Rs. 6.00 lakh to Rs. 9.00 lakh 10% Rs. 9 lakh to Rs. 12.00 lakh 15% Rs. 12 lakh to Rs. 15.00 lakh 20% Above Rs. 15.00 lakh 30%
Income Tax proposals: Income limit for rebate of income tax increased from Rs.5 lakh to Rs.7 lakh under the new regime. Surcharge rate on income of Rs.5 crore and above to be reduced from 37% to 25%. Salaried class and pensioners under new tax regime to enjoy extended benefits. Non-government employees on retirement will be able to enjoy increased tax exemption limit of up to Rs.25 lakh on leave encashment.
1) Basic exemption limit is hiked from Rs 3 lakh to Rs 2.5 lakh
2) Rebate under section 87A has been hiked from Rs 5 lakh to Rs 7 lakh
3) The income tax slabs under the new income tax regime will be as follows:
Up to Rs 3 lakh – 0% tax
Between Rs 3 and 6 lakh – 5% tax
Between Rs 6 and 9 lakh – 10% tax
Between Rs 9 lakh and Rs 12 lakh – 15% tax
Between Rs 12 lakh and Rs 15 lakh – 20% tax
Above Rs 15 lakh above – 30% tax
Furthermore, the Union Budget 2023-2024 has proposed to reduce tax deduction at source (TDS) from 30% to 20% on the taxable portion of EPF withdrawal in non-PAN cases.
Some of the major tax benefits for companies and corporations include:
15% corporate tax benefits to new cooperatives commencing manufacturing till March 31, 2024.
Higher limit of INR 3 crore for tax deducted at source (TDS) on cash withdrawal for co-operative societies.
Income of authorities, boards and commissions set up by statutes of the union territories or state to be exempted from income tax in certain sectors
Extension of period of tax benefits to funds relocating to IFSC, GIFT City till March 31, 2025.
Deduction on payments made to MSMEs to be allowed only when payment is actually made.
PAN common ID: For the business establishments required to have a Permanent Account Number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies. This will bring ease of doing business, and it will be facilitated through a legal mandate.
Data and Technology:
Three specialised AI centres to be set up in educational institutes.
Government to introduce National Data Governance Policy.
Digilockers to be set up by business entities.
For the development of 5G enabled services, 100 labs to be set up.
157 new nursing colleges to be established.
Sickle Cell Anemia Elimination mission to be bought into effect.
A program with the aim of promoting research in the field of Pharmaceutical to be launched.
Set up of Joint Public and Private Medical Reseach via select ICMR labs.
In order to encourage innovative start-ups in rural area, a new Agriculture Accelerator Fund is to be set up.
Agricultural Credit worth Rs.20 lakh targeted for the development of Animal, Husbandry, Dairy, and Fisheries sector has been set by the Central Government.
ANB Horticulter Clean Plant Program aimed at boosting production of high value horticulture crops to be launched.
Support to be provided to Indian Institute of Millet Research in Hyderabad for promoting research.
Widely available storage capacity to be set up to enable to allow more sales by farmers and help them earn profit.
Eduation: In the next 3 years, the government has proposed a provision to appoint 38800 teachers and support staff for about 740 Eklavya Model Schools under Budget 2023 Key Highlights.
District Institutes of Education Training to aid in revamped teacher’s training.
National Digital Library to be set up for children.
States to set up public libraries at panchayat and ward level.
PMKVY 4.0 to be launched where courses like Robotics, AI, 3D printing will be covered.
Under a new savings scheme for women or girls, called Mahila Samman Savings Certificate (MSSC), the fixed deposit scheme will provide a fixed interest rate of 7.5% per annum on deposits up to INR 2 lakh for tenor up to two years, with a benefit of partial withdrawal option.
For Senior Citizen Savings Scheme (SCSS), the maximum deposit limit has been hiked from INR 15 lakh to INR 30 lakh. Provided by banks and post offices, the savings scheme for senior citizens offers an interest rate of 8% per annum.
Similarly, the maximum deposit limit for post office Monthly Income Scheme Account (MIS) has been hiked to INR 9 lakh for single accounts, and up to INR 15 lakh for joint accounts. The MIS scheme for all age groups offers an interest rate of 7.10% per annum.