Union Budget of India 2023

Highlights of the Budget for 2023 include Sitharaman's announcements on the railroads, employment development, and capital expenditures.

Planning and forethought must be done with great care in finance. A budget's creation is typically the first stage in any financial endeavour. Estimating income and spending over time is what a budget entails. A person, a group of people, an organisation, a government, or any other entity that generates income and incurs costs may be the target of a budget.

What is the budget?

In order to estimate future revenue and spending, a budget is a financial document. A budget, in its most basic form, essentially forecasts future income, expenses, and savings.

What is the Union Budget?

According to Article 112 of the Indian Constitution, the Union Budget for a year, commonly known as the annual financial statement, is a declaration of the anticipated receipts and expenditures of the government for that specific year.

Key terms to comprehend the Union Budget include:

1. FINANCIAL STATEMENT ANNUAL:

According to Article 112 of the Constitution, the administration must provide to Parliament an account of anticipated revenues and expenses for each fiscal year, which runs from April 1 to March 31.

Typically, it is a 10-page white paper. Consolidated fund, contingency fund, and public account are its three component sections. The government must provide an account of revenues and expenditures for each of these monies.

2. CONSOLIDATED FUND:

This is the most significant of all government funding. The Consolidated Fund of India receives all government earnings, borrowings, and loan repayments.

Except for extraordinary items paid from the Contingency Fund or the Public Account, all government expenditures are made from this fund. Importantly, no funds may be removed from this fund without the consent of the Parliament.

3. PUBLIC ACCOUNT:

This fund is used to account for flows in transactions when the government is only acting as a banker, such as provident funds, minor deposits, and so on. These monies do not belong to the government. They must be repaid to its proper owners at some point. Because of the nature of the fund, expenditure from it does not need to be approved by Parliament.

4. REVENUE RECEIPT/EXPENDITURE:

The income account includes all revenues and expenditures that do not involve the sale or development of assets in general.

Taxes would be the most important revenue receipt.

On the spending side, everything that does not result in the production of assets is classified as revenue expenditure.

Salaries, subsidies, and interest payments are all instances of revenue spending.

5. CAPITAL RECEIPT/EXPENDITURE:

In general, any receipts and expenditures that liquidate or construct an asset would go under capital account.

For example, if the government sells shares (disinvests) in public-sector enterprises, it is effectively selling an asset.

The proceeds from the transaction would be credited to capital account.

6. REVENUE DEFICIT:

The difference between disbursements and revenues on the revenue account is referred to as the revenue deficit.

All revenue-account spending should ideally be covered by revenue-account receipts; the revenue shortfall should be zero.

When revenue expenditures exceed collections, the government is forced to borrow.

Because it is for consumption rather than asset creation, such borrowing is considered regressive.

7. FISCAL DEFICIT:

When the government's non-borrowed receipts fall short of its total expenditure, the government must borrow money from the public to make up the difference.

The fiscal deficit is the difference between total spending and total non-borrowed receipts.

The primary deficit is the fiscal deficit less interest payments.

It indicates how much of the government's borrowings are used to cover costs other than interest payments.

8. BUDGET ESTIMATES / REVISED ESTIMATES:

Amounts allotted in the Budget to any ministry or programme for the upcoming fiscal year. Revised Estimates are a mid-year evaluation of potential spending.

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2023.

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2023 on Wednesday, the fifth budget of the NDA's second term. Nirmala Sitharaman stated in the final full-fledged Budget before the general elections next year that the Indian economy is on the right track and would have a bright future. Sitharaman highlighted significant modifications in tax slabs under the new tax regime, as well as a significant increase in allocation for railroads and capital spending.

Here is a full breakdown of the different initiatives proposed by Finance Minister Sitharaman in Budget 2023, sector by sector:

Income Taxpayers:

1. No changes to the previous tax regime

2. A new tax system will be implemented as the default tax regime. Citizens can, however, choose the previous tax scheme.

3. In the new tax regime, there is no tax on income up to Rs 7.5 lakh per year (with the inclusion of standard deduction)

4. In the new tax regime, the government proposes lowering the maximum surcharge rate from 37% to 25%.

Under New Tax Regimes, New Income Tax Slabs:

Earnings -

• 0-3 lakhs = 0%

• 3-6 lakhs = 5%

• 6 - 9 Lakhs = 10%

• 9 - 12 Lakhs = 15%

• 12 - 15 Lakhs = 20%

• More than 15 lakhs = 30%

1. An person earning Rs 9 lakh will pay only Rs 45,000 in taxes, according to FM Sitharaman.

2. A salary of Rs 15 lakh will attract a tax of Rs 1.5 lakh, down from Rs 1.87 lakh.

3. The new system includes a Rs 50,000 standard deduction for taxpayers.

4. Agniveers' payment from the Agniveer Corpus Fund will be waived.

5. The tax exemption for insurance plans with premiums above Rs 5 lakh has been withdrawn.

6. For online gaming, the government plans to impose TDS and taxation on net wins at the time of withdrawal or at the end of the fiscal year.

7. The tax exemption on leave encashment on retirement for non-government paid personnel has been increased from Rs 3 lakh to Rs 25 lakh.

8. Co-operative societies would be given a greater TDS ceiling of Rs 3 crore on cash withdrawals.

9. A new Common IT Return Form will be introduced for the benefit of taxpayers.

10. Improving the grievance redressal procedure.

11. TDS rate on taxable share of EPF withdrawal in non-PAN circumstances will be decreased from 30% to 20%.

Source: The Economics Times

Indirect Taxes:

A. 16% increase in the levy on select cigarettes.

B. New cooperatives that begin production before March 20, 2024 will pay a 15% tax rate.

C. Reduced the basic customs tariff on crude glycerine to 2.5%.

D. Silver import tariff increased to match gold and platinum.

E. Extend the customs tax cut on mobile phone components imports by one year.

F. To encourage TV manufacture, the customs duty on open cells of TV panels has been decreased to 2.5%.

G. Customs duty exemption for specific parts and inputs such as camera lenses.

H. The duty exemption on lithium-ion batteries has been extended for another year.

I. The number of basic customs tax rates on non-textile and agricultural commodities has been decreased from 21 to 13. As a result, there are minimal tax adjustments on some commodities such as toys, bicycles, and vehicles.

Announcing savings plans:

1. The Senior Citizen Savings Scheme would increase its maximum deposit amount from Rs. 15 lakh to Rs. 30 lakh.

2. Increased the monthly income scheme cap to Rs. 9 lakh and Rs. 15 lakh for combined accounts

3. A one-time new savings programme called the Mahila Samman Saving Certificate would be made available to women for two years, until March 2025.

4. For a period of two years at a set rate, it would provide a deposit facility of up to Rs 2 lakh in the name of women or girls.

A significant boost for the railroads:

The budget for the railroads was allocated Rs 2.4 lakh crore in FY24, which is a roughly nine-fold increase over FY14's budget.

Capital expenditures increased by 33% :

Rs 10 lakh crore in capital investment, a 33% increase for the third year in a row, to boost economic potential and job creation, crowd-in private investments, and offer a buffer against global headwinds.

The center's effective capital expenditure will be Rs 13.7 lakh crore.

In FY24, capital investment will account for 3.3% of GDP.

The Centre's effective capital expenditure in FY24 was Rs 13.7 lakh.

A new Infrastructure Finance Secretariat has been formed to improve prospects for private investment in infrastructure.

The Defense Budget has been increased by 13%:

The defence budget was raised from Rs 5.25 lakh crore to Rs 5.94 lakh crore this year, with Rs 1.62 lakh crore set aside for capital spending, which includes the procurement of new weapons, planes, warships, and other military gear. The financial allocation for capital outlay for 2022-23 was Rs 1.52 lakh crore, with the Border Roads Organization's capital budget rising to Rs 5,000 crore. Investing in the Indian Air Force.

The Indian Navy has a capital outlay of Rs 52,804 crore, whereas the Army has a capital outlay of Rs 37,241 crore.

The allocation for the Defence Research and Development Organization (DRDO) is Rs 23,264 crore.

Fiscal situation:

• The fiscal deficit is expected to be less than 4.5% by 2025-26.

• The fiscal deficit objective of 6.4% in FY23 is maintained in the Revised Estimate; it is decreased to 5.9% in FY24.

• In FY24, gross market borrowing was estimated to be Rs 15.43 lakh billion.

• Net market borrowing was Rs 11.8 lakh crore in FY24.

· The revised FY23 net tax revenues projection is at Rs 20.9 lakh crore.

• The revised overall spending estimate for FY23 is Rs 41.9 lakh crore.

MSME:

A revised credit guarantee for MSMEs will go into effect on April 1, 2023, with a corpus of Rs 9,000 crore. The initiative would allow for an additional Rs 2 lakh crore in collateral-free guaranteed loans, as well as a 1% reduction in credit costs.

Banking:

The government is considering changes to the Banking Regulation Act in order to strengthen bank governance.

Jobs:

The government will introduce the Pradhan Mantri Kaushal Vikas Yojana. 4.0, To prepare youngsters for foreign prospects, 30 Skill India International Centres would be established across various states, and a pan-India National Apprenticeship Promotion Scheme will be implemented to give stipend assistance to 47.

Clean Energy:

Priority capital of Rs 35,000 crores for the energy transition.

The Environment Protection Act will be used to notify the green credit scheme.

Battery storage will get financing to bridge the viability gap.

With an investment of Rs 19,700 crore, the government would assist the establishment of 4,000 MwH battery energy storage capacity as part of the National Green Hydrogen mission, facilitating the transformation of the economy to a low carbon intensity and reducing reliance on fossil fuel imports.

Aviation:

To strengthen regional air connection, 50 more airports, helipods, water aero drones, and sophisticated landing grounds will be revived.

Business Simplicity:

The government plans to implement another commercial dispute resolution mechanism, Vivad Se Vishwas-2, and to use PAN as a single identity for all government digital services. A one-stop solution for reconciling and updating identities maintained by various agencies will be established, with digi locker and Aadhaar serving as the foundational identity. A Central Processing Centre will be established to provide a faster response to companies filing forms under the Companies Act.

The PAN will be used as a standard identification for all Digital Systems of selected government entities for commercial enterprises that are obliged to have a Permanent Account Number. To improve the ease of doing business, more than 39,000 compliances have been lowered and over 3,400 law provisions have been decriminalised. The Jan Vishwas Bill, which amends 42 Central Acts to promote trust-based governance, has been tabled, and the Finance Minister has announced a number of initiatives to boost commercial activity in GIFT CITY.

Digital services:

• DigiLocker's service offering will be increased.

• 100 laboratories for creating apps to leverage 5G services will be established in engineering colleges.

• Labs will explore smart classrooms, precision farming, and healthcare applications.

• Phase 3 of E-courts projects would be launched with an investment of Rs 7,000 crore.

• Key industry players will collaborate to create scalable solutions for the health, agriculture, and other sectors.

Budget priorities are as follows:

1. Development that is inclusive.

2. completing the final mile.

3. Infrastructure and investment.

4. Realizing Potential.

5. Growth that is green.

6. Youth power.

7. The financial sector.

Agriculture and fishing will benefit:

- Agricultural accelerator fund to support agribusiness businesses

- 10,000 bio-input resource centres in the next three years to encourage organic farming

- A budget of 6000 crores is set out for animal husbandry, dairy, and fisheries.

Women and Senior Citizens:

- The Mahila Samman Savings Certificate has been introduced (7.5% int., 2 years tenure, 2L maximum).

- The Senior Citizen Savings Scheme deposit ceiling has been raised from 15 lakh to 30 lakh.

Sports receive a budget of Rs 3,397.32 crore, an increase of Rs 723.97 crore:

The Rs 3,397.32 crore sports budget allocation is the greatest in the country's history.

'Khelo India' has been given a budget of Rs 1,045 crore.

For 2023-24, the Sports Authority of India will get Rs 785.52 crore.

National Sports Federations would see an increase of Rs 325 crore.

Education:

• Three artificial intelligence excellence centres will be established in prestigious educational institutions.

• 157 new nursing colleges will be constructed alongside the 157 medical colleges that have already been established since 2014.

• Eklavaya Model Residential Schools will be built during the following three years. The government will hire 38,800 teachers and other staff for 740 schools that would serve 3.5 lakh tribal kids.

• A National Data Governance Policy will be released to spur start-ups and academics to innovate and conduct research.

A Digital Library for Children and Adolescents Will Be Established:

• A national digital library for children and adolescents will be established.

• The National Book Trust and the Children's Book Trust will restock digital libraries with non-curricular works in regional languages and English.

• States should be encouraged to establish physical libraries at the panchayat and ward levels, as well as infrastructure for accessing National Digital Library materials.

Development of Cities:

• The government would spend Rs 10,000 crore per year on an urban infrastructure development fund; cities will be incentivized to enhance their creditworthiness for municipal bonds; and all cities and towns will be able to switch completely to sewers and septic tanks.

Health:

• The goal is to eliminate sickle cell anaemia by 2047,

A new pharmaceutical research programme will be developed, and business will be urged to invest in research.

Housing:

• The budget for the PM Awaas Yojana has been increased by 66% to nearly Rs 79,000 crore.

Continued interest-free borrowing to states:

• The Centre will extend a 50-year interest-free loan to state governments for another year.

The free meal programme will continue until 2024:

In order to maintain our commitment to food security, we will begin implementing the PM Garib Kalyan Ann Yojana, which will provide free food grain to all Antyodaya and priority households for one year, beginning January 1, 2023.

What gets cheaper and what gets more expensive:

Cheaper:

• Mobile phones are less expensive.

• TV.

• Diamonds produced in a laboratory.

• Shrimp meal.

• Lithium ion battery machinery.

• Materials for the EV sector.

Expensive:

Cigarettes, silver, moulded rubber, imitation jewellery Items created with gold bars, Bicycles and toys from other countries, Imported electric kitchen chimney, imported luxury automobiles and EVs.