The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament on 01.02.2023. The highlights of the Budget are as follows:
PART A
Per capita income has more than doubled to ₹1.97 lakh in around nine years. Indian economy has increased in size from being 10th to 5th largest in the world in the past nine years. 7,400 crore digital payments of ₹126 lakh crore has taken place through UPI in 2022. Seven priorities of the budget ‘Saptarishi’ are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector. Entity DigiLocker to be setup for use by MSMEs, large business and charitable trusts to store and share documents online securely. 100 labs to be setup for 5G services based application development to realize a new range of opportunities, business models, and employment potential. 30 Skill India International Centres to be set up across different States to skill youth for international opportunities. Revamped credit guarantee scheme for MSMEs to take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This scheme would enable additional collateral-free guaranteed credit of Rs 2 lakh crore and also reduce the cost of the credit by about 1 per cent. Central Processing Centre to be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
Digital public infrastructure for agriculture to be built as an open source, open standard and inter operable public good to enable inclusive farmer centric solutions and support for growth of agri-tech industry and start-ups. More than 39,000 compliances reduced and more than 3,400 legal provisions decriminalized to enhance Ease of Doing Business. Three centres of excellence for Artificial Intelligence to be set-up in top educational institutions to realise the vision of “Make AI in India and Make AI work for India”. National Data Governance Policy to be brought out to unleash innovation and research by start-ups and academia. One stop solution for reconciliation and updation of identity and address of individuals to be established using DigiLocker service and Aadhaar as foundational identity. PAN will be used as the common identifier for all digital systems of specified government agencies to bring in Ease of Doing Business. Phase-3 of the E-Courts project to be launched with an outlay of Rs. 7,000 crore for efficient administration of justice.
Battery energy storage systems to be promoted to steer the economy on the sustainable development path. A unified Skill India Digital platform to be launched for enabling demand-based formal skilling, linking with employers including MSMEs, and facilitating access to entrepreneurship schemes. Sector specific skilling and entrepreneurship development to be dovetailed to achieve the objectives of the ‘Dekho Apna Desh’ initiative. States to be encouraged to set up a Unity Mall for promotion and sale of their own and also all others states’ ODOPs (One District, One Product), GI products and handicrafts. Delegating powers under the SEZ Act to IFSCA to avoid dual regulation. Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI. Establishing a subsidiary of EXIM Bank for trade re-financing. Integrated IT portal to be established to enable investors to easily reclaim the unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.
PART – B DIRECT TAXES
Direct Tax proposals aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens. Constant endeavour of the Income Tax Department to improve Tax Payers Services by making compliance easy and smooth. To further improve tax payer services, proposal to roll out a next-generation Common IT Return Form for tax payer convenience, along with plans to strengthen the grievance redressal mechanism. Rebate limit of Personal Income Tax to be increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lakh to not pay any tax. Tax structure in new personal income tax regime, introduced in 2020 with six income slabs, to change by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lakh. Change to provide major relief to all tax payers in the new regime. Proposal to extend the benefit of standard deduction of Rs. 50,000 to salaried individual, and deduction from family pension up to Rs. 15,000, in the new tax regime. Highest surcharge rate to reduce from 37 per cent to 25 per cent in the new tax regime. This to further result in reduction of the maximum personal income tax rate to 39 per cent. The limit for tax exemption on leave encashment on retirement of non-government salaried employees to increase to Rs. 25 lakh. The new income tax regime to be made the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime. Enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation proposed. 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. Deduction for expenditure incurred on payments made to MSMEs to be allowed only when payment is actually made in order to support MSMEs in timely receipt of payments. New co-operatives that commence manufacturing activities till 31.3.2024 to get the benefit of a lower tax rate of 15 per cent, as presently available to new manufacturing companies. Date of incorporation for income tax benefits to start-ups to be extended from 31.03.23 to 31.3.24. Proposal to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to ten years. Deduction from capital gains on investment in residential house under sections 54 and 54F to be capped at Rs. 10 crore for better targeting of tax concessions and exemptions. Proposal to limit income tax exemption from proceeds of insurance policies with very high value. Where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above Rs. 5 lakh, income from only those policies with aggregate premium up to Rs. 5 lakh shall be exempt. Income of authorities, boards and commissions set up by statutes of the Union or State for the purpose of housing, development of cities, towns and villages, and regulating, or regulating and developing an activity or matter, proposed to be exempted from income tax. Minimum threshold of Rs. 10,000/- for TDS to be removed and taxability relating to online gaming to be clarified. Proposal to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year. 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. Income from Market Linked Debentures to be taxed. Deployment of about 100 Joint Commissioners for disposal of small appeals in order to reduce the pendency of appeals at Commissioner level. Increased selectivity in taking up appeal cases for scrutiny of returns already received this year. Period of tax benefits to funds relocating to IFSC, GIFT City extended till 31.03.2025. Certain acts of omission of liquidators under section 276A of the Income Tax Act to be decriminalized with effect from 1st April, 2023. Carry forward of losses on strategic disinvestment including that of IDBI Bank to be allowed. Agniveer Fund to be provided EEE status. The payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 proposed to be exempt from taxes. Deduction in the computation of total income is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi account.
INDIRECT TAXES
Number of basic customs duty rates on goods, other than textiles and agriculture, reduced to 13 from 21. Minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha. Customs Duty on specified capital goods/machinery for manufacture of lithium-ion cell for use in battery of electrically operated vehicle (EVs) extended to 31.03.2024 Customs duty exempted on vehicles, specified automobile parts/components, sub-systems and tyres when imported by notified testing agencies, for the purpose of testing and/ or certification, subject to conditions. Customs duty on camera lens and its inputs/parts for use in manufacture of camera module of cellular mobile phone reduced to zero and concessional duty on lithium-ion cells for batteries extended for another year. Basic customs duty reduced on parts of open cells of TV panels to 2.5 per cent.
Legislative Changes in Customs Laws
Customs Act, 1962 to be amended to specify a time limit of nine months from date of filing application for passing final order by Settlement Commission. Customs Tariff Act to be amended to clarify the intent and scope of provisions relating to Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and Safeguard Measures. CGST Act to be amended to raise the minimum threshold of tax amount for launching prosecution under GST from one crore to two crore; to reduce the compounding amount from the present range of 50 to 150 per cent of tax amount to the range of 25 to 100 per cent; decriminalise certain offences; to restrict filing of returns/statements to a maximum period of three years from the due date of filing of the relevant return/statement; and to enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs).
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