Union Budget 2023 Highlights and Important Points

 

On 1st February 2023, the Finance Minister, Nirmala Sitharaman, outlined the budget for the upcoming fiscal year. The new budget serves as the blueprint for an inclusive and empowered economy. The budget listed seven main priorities, namely:

• Green Growth
• Youth Power
• Financial Sector
• Inclusive Development
• Reaching the Last Mile
• Infrastructure and Investment
• Unleashing the Potential

Let’s look at the main highlights of the budget and how they impact you:

Budget and the Economy

• The Capital Expenditure (CapEx) outlay has increased by 33% to amount to 3.3% of the GDP at INR 10 lakh crore, while the effective CapEx will be 4.5% of the GDP that is INR 13.7 lakh crore.
• The budget aims to keep the fiscal deficit at 5.9%, while states are allowed a deficit of 3.5% of GSDP. Of this, 0.5% should be tied to power sector reforms.
• Infusion of INR 9,000 crore for MSMEs with an additional of INR 2 lakh crore credit guarantee for MSMEs and also reduce the cost of the credit by about 1 per cent
• A National Financial Information Registry will get set up to promote financial inclusion, foster financial stability, and ensure efficient credit flow.

Budget and Income Tax

• The new tax regime increases the rebate limit to INR 7 lakh. 
• The number of slabs in the new regime is reduced to five and the tax exemption limit is increased to INR 3 lakh. Taxes under the new regime are as follows:

Net Annual Income Range	New Regime Tax Rate
Up to INR 3 lakhs	Nil
INR 3-6 lakh	5%
INR 6-9 lakh	10%
INR 9-12 lakh	15%
INR 12-15 lakh	20%
More than INR 15 lakhs	30%

• The standard deduction benefit is now extended to the salaried class and pensioners under the new regime.
• The new regime has become the default tax system. However, taxpayers can choose to continue to calculate and pay taxes as per the old regime. 
• The highest surcharge levied on personal income tax has been reduced significantly from 37% to 25%.
• The leave encashment limit on retirement for non-governmental salaried employees has increased from INR 3 lakh to INR 25 lakh.
• Deduction from capital gains on investment in a residential house under sections 54 and 54F is now capped at INR 10 crore.
• Income from insurance policies (other than ULIP) having premium or aggregate of premium above Rs.5,00,000 in a year will be taxed. This income shall be taxable under the head “income from other sources”. Deduction shall be allowed for premium paid if such deduction is not claimed earlier under any other provisions of the Act. The new rule shall apply for policies issued on or after 1st April, 2023. However, the income is proposed to be exempt if received on the death of the insured person.
• Conversion of gold into electronic gold receipt and vice versa not to be treated as capital gain.
• TDS rate to be reduced from 30 per cent to 20 per cent on taxable portion of EPF withdrawal in non-PAN cases.
• Enhanced limits for micro enterprises INR 3 crore and for certain professionals INR 75 lakhs for availing the benefit of presumptive taxation. Increased limit to apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.

Budget and Indirect Taxes

• As part of the Green Growth priority, the Government proposes to exempt excise duty on GST-paid compressed biogas.
• The budget aims to reduce the customs duty on the import of certain mobile phone parts. 
• The basic customs duty on parts of open cells for TV panels will be reduced to 2.5%.
• The customs duty for electric kitchen chimneys will increase from 7.5% to 15%.
• The customs duty on chimney heat coils will decrease from 20% to 15%. 
• A new exemption is introduced for the basic customs duty on chemicals and petrochemicals.
• Basic customs duty on acid-grade fluorspar (containing by weight more than 97 per cent of calcium fluoride) and crude glycerine will reduce to 2.5%.
• Custom duties to increase on items made from gold and platinum.
• Increased import duty for silver.
• Taxes on cigarettes hiked by 16%.

Budget and Senior Citizens

• The maximum deposit limit in the Senior Citizen Savings Scheme was revised upwards from INR 15 lakh to INR 30 lakh.
• The maximum deposit limit for the Monthly Income Account Scheme increased from INR 4.5 lakh to INR 9 lakh for a single account and INR 9 lakh to INR 15 lakh for a joint account.

Budget and Youth

• Introduction of a National Apprenticeship Promotion Scheme to provide a stipend to support 47 lakh youth over three years.
• Pradhan Mantri Kaushal Vikas Yojana 4.0 to offer on-job training, industry partnerships, and new-age courses.
• Expansion of a digital ecosystem to enable demand-based formal skill training, link youth to employers and facilitate access to entrepreneurship schemes.
• Recruitment of 38,800 teachers and support staff across 749 Eklavya Model Residential Schools that can reach 3.5 lakh tribal students over the next three years

Budget and the Future

• Three centres of excellence for AI are to be established in top educational institutions across the country.
• 100 laboratories across engineering institutions will use 5G services to develop applications.
• Creation of a national digital library for children and adolescents to facilitate the availability of quality books across genres, languages and geographies.
• 50 additional airports, helipads, water aero drones and landing grounds will be revived to boost regional air connectivity.
• 48% increase in allocation for the renewable energy sector.

What’s Cheaper and What’s More Expensive – At a Glance

More Expensive	Less Expensive
Vehicles, including electric vehicles	Compressed gas
Silver Dore	Lab-grown diamonds
Naphtha	Precious metal waste and scrap or metal clad with precious metals
Textiles	Fish lipid oil used in manufacturing aquatic feed
Compounded rubber	Certain TV, camera and mobile phone parts
Imitation jewellery and articles of precious metals	Lithium ion cells for batteries
Electric kitchen chimneys	Shrimp feed
Imported bicycles
Non-electric toys and parts of such toys

The Union Budget 2023 aims to establish India as a forward-thinking nation. The new tax limits could increase people’s spending power and boost the economy in the upcoming financial year. Further, the focus on educating and empowering the youth will help create a young and vibrant population hungry to make India an economic superpower.

FAQs about Union Budget 2023 Highlights

1. What are the highlights of Budget 2023?

The Union Budget 2023 highlights are that it has been hailed as pro-people and pro-market. It sought to build on prior Budgets and focus on technology, green growth, infrastructure and macro-economic stability. Tax opportunities for citizens and youth were also provided, with an aim to create jobs. It has been seen as a Budget that could spur economic growth in India. 

2. What are the important points of Budget session 2023?

The Union Budget 2023 highlights a new direct tax system, relief for high-net-worth individuals, increased spending on infrastructure, aid for agriculture and rural areas, empowerment of women with a Rs. 28,600 crore allocation, incentives for entrepreneurs, funding for healthcare, digitalization push, increased education budgets, and 'green growth' strategies. This comprehensive strategy is expected to reinvigorate the economy and catalyse growth.

3. What was the agenda or key focus of 2023 budget?

Union Budget 2023 aims to: 

- Create a simple direct tax system 

- Reduce surcharge for high-net-worth individuals

- Allocate Rs. 10 lakh crore for infrastructure development 

- Uplift the agricultural and rural sectors and empower women 

- Promote entrepreneurship 

- Increase healthcare expenditure 

- Push for digitalization and augment the education budget 

- Implement a 'green growth' plan for holistic economic revival

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ARN: ED/02/23/32068