Highlights of the UNION BUDGET 2023-24

The Union Budget for the fiscal year 2023-24 stands out for its comprehensive approach towards economic recovery, infrastructure development, and social welfare. One of the key highlights is the government’s commitment to boosting economic growth through substantial investments in critical sectors such as healthcare, education, and infrastructure. The healthcare sector has received increased attention, with a significant allocation for the establishment of new hospitals and healthcare facilities, as well as the enhancement of existing ones. The budget also emphasizes sustainable development, with a focus on green initiatives and renewable energy projects to address environmental concerns. Additionally, there are noteworthy provisions for the education sector, including increased funding for skill development programs and the promotion of digital learning. In a bid to stimulate job creation and entrepreneurship, the budget introduces measures to support small and medium enterprises (SMEs) and startups. Furthermore, the emphasis on digital governance and technological advancements showcases the government’s commitment to modernizing administrative processes. Overall, the Union Budget 2023-24 reflects a strategic and forward-looking approach to address the challenges and opportunities facing the nation, with a strong emphasis on inclusive and sustainable development.

PART A

Economic and Social Progress

• Per capita income in India has more than doubled to ₹1.97 lakh in approximately nine years.
• The Indian economy has grown from the 10th to the 5th largest in the world.
• EPFO membership has more than doubled to 27 crore.
• 7,400 crore digital payments totaling ₹126 lakh crore through UPI in 2022.
• Swachh Bharat Mission has resulted in the construction of 11.7 crore household toilets.
• Ujjwala has provided 9.6 crore LPG connections.
• PM Jan Dhan’s bank accounts initiative has resulted in 47.8 crore accounts.
• 44.6 crore people have insurance coverage under PM Suraksha Bima and PM Jeevan Jyoti Yojana.
• Farmers have received cash transfers of ₹2.2 lakh crore under PM Kisan Samman Nidhi.
• Seven priorities of the budget ‘Saptarishi’ are inclusive development, reaching the last mile, infrastructure and investment, unleashing potential, green growth, youth power, and financial sector.

New Initiatives

• Atmanirbhar Clean Plant Program with an outlay of ₹2200 crore to boost availability of disease-free, quality planting material for high-value horticultural crops.
• 157 new nursing colleges will be established in co-location with the existing 157 medical colleges.
• Centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students over the next three years.
• PM Awas Yojana’s outlay increased by 66% to over Rs. 79,000 crore.
• Capital outlay of Rs. 2.40 lakh crore provided for the Railways, the highest ever outlay.
• UIDF will be established to create urban infrastructure in Tier 2 and Tier 3 cities.
• DigiLocker will be set up for MSMEs, large businesses, and charitable trusts to store and share documents online securely.
• 100 labs will be set up for 5G services-based application development.
• GOBARdhan scheme with 500 new ‘waste to wealth’ plants to promote a circular economy at a total investment of Rs 10,000 crore.
• 5% compressed biogas mandate will be introduced for all organizations marketing natural and biogas.
• Centre will facilitate one crore farmers to adopt natural farming over the next three years.
• 10,000 Bio-Input Resource Centres will be set up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network.
• Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth within the next three years.
• 30 Skill India International Centres will be set up across different states to skill youth for international opportunities.
• Revamped Credit Guarantee Scheme for MSMEs:
  • Effective from April 1, 2023
  • An infusion of Rs 9,000 crore in the corpus
  • Enables additional collateral-free guaranteed credit of Rs 2 lakh crore
  • Reduces the cost of credit by about 1%
  • Central Processing Centre will be set up to provide faster responses to companies
• Enhancement of Senior Citizen Savings Scheme:
  • Maximum deposit limit to be enhanced from Rs 15 lakh to Rs 30 lakh
• Agriculture Initiatives:
  • The Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs in rural areas
  • Indian Institute of Millet Research in Hyderabad will be supported as the Centre of Excellence
  • The targeted agricultural credit of ₹20 lakh crore is aimed at animal husbandry, dairy, and fisheries
  • A new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of ₹6,000 crore will be launched
  • Digital public infrastructure for agriculture will be built as an open-source, open-standard, and interoperable public good
  • Computerization of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of ₹2,516 crore has been initiated
  • Massive decentralized storage capacity will also be set up to help farmers store their produce
• Other initiatives:
  • Sickle Cell Anemia elimination mission to be launched
  • Joint public and private medical research encouraged through select ICMR labs
  • A new program to boost research in pharmaceuticals
  • Capital investment to be increased to Rs. 10 lakh crore to enhance growth potential and job creation
  • Aspirational Blocks Programme to be launched, covering 500 blocks
  • Rs. 15,000 crore to be invested in the Pradhan Mantri PVTG Development Mission
  • Rs. 75,000 crore to be invested in one hundred critical transport infrastructure projects
  • A new Infrastructure Finance Secretariat will be established
  • District Institutes of Education and Training to be developed as vibrant institutes of excellence
  • National Digital Library for Children and Adolescents will be set up to facilitate the availability of quality books across geographies, languages, genres, and levels, and device-agnostic accessibility.
• The central government will give Rs. 5,300 crore in assistance to the Upper Bhadra Project to provide sustainable micro-irrigation and to fill up surface tanks for drinking water.
• The Bharat Shared Repository of Inscriptions will be established in a digital epigraphy museum, with the first stage involving the digitization of one lakh ancient inscriptions.
• The Centre plans to have an Effective Capital Expenditure of Rs. 13.7 lakh crore.
• The government will continue to provide a 50-year interest-free loan to state governments for one more year to encourage investment in infrastructure and complementary policy actions.
• States and cities are being encouraged to undertake urban planning reforms and actions to make them sustainable cities of the future.
• All cities and towns will transition from manhole to machine-hole mode to enable 100 percent mechanical desludging of septic tanks and sewers.
• The government launched iGOT Karmayogi, an integrated online training platform, to provide continuous learning opportunities for government employees and facilitate a people-centric approach.
• The government reduced over 39,000 compliances and decriminalized over 3,400 legal provisions to improve Ease of Doing Business.
• The Jan Vishwas Bill was introduced to amend 42 Central Acts to promote trust-based governance.
• Three centers of excellence for Artificial Intelligence will be set up in top educational institutions to realize the vision of “Make AI in India and Make AI work for India.”
• A National Data Governance Policy will be introduced to encourage innovation and research by start-ups and academia.
• A one-stop solution for reconciliation and updating of identity and address of individuals will be established using the DigiLocker service and Aadhaar as a foundational identity.
• PAN will be used as the common identifier for all digital systems of specified government agencies to improve Ease of Doing Business.
• The government will return 95 percent of the forfeited amount relating to bid or performance security to MSMEs if they failed to execute contracts during the Covid period.
• Result-Based Financing will be introduced to better allocate scarce resources for competing development needs.
• Phase 3 of the E-Courts project will be launched with an outlay of Rs. 7,000 crore for efficient administration of justice.
• An R&D grant for the Lab Grown Diamonds (LGD) sector will encourage indigenous production of LGD seeds and machines and reduce import dependency.
• The government targets an annual production of 5 MMT under the Green Hydrogen Mission by 2030 to facilitate the transition of the economy to low carbon intensity and to reduce dependence on fossil fuel imports.
• An outlay of Rs. 35,000 crore is provided for energy security, energy transition, and net-zero objectives.
• Battery energy storage systems will be promoted to steer the economy toward sustainable development.
• An outlay of Rs. 20,700 crore is provided for renewable energy grid integration and evacuation from Ladakh.
• The “PM Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth” (PM-PRANAM) will be launched to incentivize states and union territories to promote alternative fertilizers and balanced use of chemical fertilizers.
• “Mangrove Initiative for Shoreline Habitats & Tangible Incomes” (MISHTI) will be implemented for mangrove plantations along the coastline and on salt pan lands through convergence between MGNREGS, CAMPA Fund, and other sources.
• The government will notify the Green Credit Programme under the Environment (Protection) Act to incentivize and mobilize additional resources for environmentally sustainable and responsive actions.
• The Amrit Dharohar scheme will be implemented over the next three years to:
  • Encourage optimal use of wetlands
  • Enhance biodiversity and carbon stock
  • Create eco-tourism opportunities
  • Generate income for local communities
• A unified Skill India Digital platform will be launched to:
  • Enable demand-based formal skilling
  • Link with employers, including MSMEs
  • Facilitate access to entrepreneurship schemes
• The Direct Benefit Transfer will be rolled out under the National Apprenticeship Promotion Scheme to provide stipend support to 47 lakh youth in three years.
• At least 50 tourist destinations will be selected and developed as a complete package for domestic and foreign tourists through the ‘Dekho Apna Desh’ initiative.
• Sector-specific skilling and entrepreneurship development will be dovetailed to achieve the initiative’s objectives.
• The Unity Mall will be set up for states to promote and sell their own and all other states’ ODOPs, GI products, and handicrafts.
• A National Financial Information Registry will be established to:
  • Serve as the central repository of financial and ancillary information
  • Facilitate the efficient flow of credit
  • Promote financial inclusion
  • Foster financial stability
• A comprehensive review of existing regulations will be carried out by financial sector regulators in consultation with public and regulated entities.
• Measures will be taken to enhance business activities in GIFT IFSC, including:
  • Delegating powers under the SEZ Act to IFSCA
  • Setting up a single-window IT system for registration and approval
  • Permitting acquisition financing by IFSC Banking Units of foreign banks
  • Establishing a subsidiary of EXIM Bank for trade refinancing
  • Amending the IFSCA Act for statutory provisions for arbitration, and ancillary services, and avoiding dual regulation under the SEZ Act
  • Recognizing offshore derivative instruments as valid contracts
  • Proposing amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve of India Act to improve bank governance and enhance investors’ protection
  • Countries looking for digital continuity solutions will be facilitated for setting up their Data Embassies in GIFT IFSC.
• SEBI will be empowered to:
  • Develop, regulate, maintain, and enforce norms and standards for education in the National Institute of Securities Markets
  • Recognize the award of degrees, diplomas, and certificates
• An integrated IT portal will be established to enable investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority easily.
• To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, the Mahila Samman Savings Certificate, will be launched.
• The maximum deposit limit for the Monthly Income Account Scheme will be enhanced for a single account and joint account.
• The entire fifty-year interest-free loan to states will be spent on capital expenditure within 2023-24. A Fiscal Deficit of 3.5% of GSDP will be allowed for states, of which 0.5% is tied to Power sector reforms. Part of the loan is conditional on states increasing actual capital expenditure, and parts of the outlay will be linked to states undertaking specific loans.
• Revised Estimates 2022-23:
  • Total receipts other than borrowings: Rs 24.3 lakh crore
    • Net tax receipts: Rs 20.9 lakh crore
  • Total expenditure: Rs 41.9 lakh crore
    • Capital expenditure: Rs 7.3 lakh crore
• Fiscal deficit: 6.4% of GDP, adhering to the Budget Estimate
• Budget Estimates 2023-24:
  • Total receipts other than borrowings are estimated at Rs 27.2 lakh crore
    • Net tax receipts estimated at Rs 23.3 lakh crore
• Total expenditure estimated at Rs 45 lakh crore
• Fiscal deficit estimated to be 5.9% of GDP
• Net market borrowings from dated securities to finance the fiscal deficit in 2023-24 are estimated at Rs 11.8 lakh crore
• Gross market borrowings are estimated at Rs 15.4 lakh crore.

PART B

Direct Taxes

• The Direct Tax proposals aim to:
  • Maintain continuity and stability of taxation.
  • Simplify and rationalize various provisions to reduce the compliance burden.
  • Promote the entrepreneurial spirit.
  • Provide tax relief to citizens.
• The Income Tax Department is constantly striving to improve Tax Payers Services and make compliance easy and smooth.
• To further improve taxpayer services, a next-generation Common IT Return Form will be rolled out for taxpayer convenience, along with plans to strengthen the grievance redressal mechanism.
• The rebate limit of Personal Income Tax in the new tax regime will be increased to Rs. 7 lakh from the current Rs. 5 lakh. Therefore, people with income up to Rs. 7 lakh in the new tax regime will not pay any tax.
• The tax structure in the new personal income tax regime, which was introduced in 2020 with six income slabs, will be changed by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lakh. This change will provide significant relief to all taxpayers in the new regime.

The following proposals have been made in the new tax regime:

• Proposal to extend the benefit of standard deduction of Rs. 50,000 to salaried individuals, and deduction from family pension up to Rs. 15,000, in the new tax regime.
• The highest surcharge rate is to be reduced from 37 percent to 25 percent in the new tax regime. This to further result in a reduction of the maximum personal income tax rate to 39 percent.
• 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 is 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 are 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 percent of the total gross receipts/turnover.
• Deduction for expenditure incurred on payments made to MSMEs to be allowed only when payment is made 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 percent, as presently available to new manufacturing companies.
• The opportunity provided to sugar co-operatives to claim payments made to sugarcane farmers for the period before the assessment year 2016-17 as an expenditure. This is expected to provide them a relief of almost Rs. 10,000 crore.
• Provision of a higher limit of Rs. 2 lakh per member for cash deposits to and loans in cash by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).
• A higher limit of Rs. 3 crore for TDS on cash withdrawal is to be provided to co-operative societies.
• The date of incorporation for income tax benefits to start-ups is to be extended from 31.03.23 to 31.3.24.
• Proposal to provide the benefit of carrying forward losses on change of shareholding of start-ups from seven years of incorporation to ten years.
• Deduction from capital gains on investment in residential houses under sections 54 and 54F is 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 the 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 premiums up to Rs. 5 lakh shall be exempt.
• Income of authorities, boards, and commissions set up by statutes of the Union or State for housing, development of cities, towns, and villages, and regulating, or regulating and developing an activity or matter, proposed to be exempted from income tax.
• The 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 the end of the financial year.
• Conversion of gold into electronic gold receipt and vice versa is not to be treated as capital gain.
• TDS rate to be reduced from 30 percent to 20 percent 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 to reduce the pendency of appeals at the 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 are 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 Revised

The Indian government has made several changes to its indirect taxes policy. These changes include:

• Reducing the number of basic customs duty rates for non-textile and non-agriculture goods from 21 to 13.
• Making minor adjustments to basic custom duties, cesses, and surcharges for certain items such as toys, bicycles, automobiles, and naphtha.
• Exempting excise duty for compressed biogas containing GST-paid blend of compressed natural gas.
• Extending the customs duty for specified capital goods/machinery for lithium-ion cell manufacturing used in electric vehicle (EV) batteries until 31.03.2024.
• Granting customs duty exemption on vehicles, automobile parts/components, sub-systems, and tires imported by notified testing agencies for testing and/or certification purposes, subject to specific conditions.
• Reducing the customs duty on camera lens and its inputs/parts for manufacturing cellular mobile phone camera modules to zero, and extending concessional duty on lithium-ion cells for batteries for another year.
• Decreasing the basic customs duty on open cell TV panel parts to 2.5%.
• Increasing the basic customs duty on electric kitchen chimneys to 15% from 7.5%.
• Reducing the basic customs duty on heat coil for electric kitchen chimney manufacturing to 15% from 20%.
• Exempting denatured ethyl alcohol used in the chemical industry from basic customs duty.
• Lowering the basic customs duty on acid-grade fluorspar (containing more than 97% calcium fluoride) to 2.5% from 5%.
• Decreasing the basic customs duty on crude glycerin used for manufacturing epichlorohydrin to 2.5% from 7.5%.
• Lowering the duty on key inputs for domestic shrimp feed manufacturing.
• Reducing the basic customs duty on seeds used for manufacturing lab-grown diamonds.
• Increasing duties on articles made from dore and bars of gold and platinum.
• Increasing the import duty on silver dore, bars, and articles.
• Continuing the basic customs duty exemption on raw materials for CRGO Steel, ferrous scrap, and nickel cathode manufacturing.
• Continuing the concessional BCD of 2.5% on copper scrap.
• Increasing the basic customs duty rate on compounded rubber to 25% from 10% or 30 per kg, whichever is lower.
• Revising upwards the National Calamity Contingent Duty (NCCD) on specified cigarettes by approximately 16%.
• Amending the Customs Act, of 1962, to specify a nine-month time limit from the application filing date for passing a final order by the Settlement Commission.
• Amending the Customs Tariff Act to clarify the intent and scope of provisions regarding Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and Safeguard Measures.
• Amending the CGST Act to increase the minimum threshold of tax amount for launching prosecution under GST from one crore to two crores, reduce the compounding amount from 50-150% of tax amount to 25-100%, decriminalize certain offenses, restrict filing of returns/statements to a maximum of three years from the due date of filing of the relevant return/statement, and enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs).

Frequently Asked Questions (FAQs)

1. Q: What are the key highlights of the Union Budget 2023-24?

A: The Union Budget 2023-24 focuses on several key areas, including increased spending on healthcare, infrastructure development, and measures to boost economic growth. It introduces tax reforms, emphasizes digital initiatives, and allocates funds for key sectors to stimulate overall development.

2. Q: How does the Union Budget address healthcare in the upcoming fiscal year?

A: The Union Budget 2023-24 places a significant emphasis on healthcare, allocating substantial funds for the creation and upgrading of healthcare infrastructure. This includes investments in hospitals, medical research, and the procurement of essential medical supplies, aimed at enhancing the overall healthcare ecosystem.

3. Q: What measures has the Union Budget taken to boost economic growth?

A: To boost economic growth, the Union Budget 2023-24 introduces a series of measures, including tax reforms and incentives for key sectors. It outlines plans for promoting entrepreneurship, supporting small and medium enterprises (SMEs), and fostering innovation through various financial and regulatory initiatives.

4. Q: How does the Union Budget address digital initiatives and technology advancements?

A: The Union Budget places a strong emphasis on digital initiatives, recognizing the importance of technology in the modern economy. It outlines plans for investments in digital infrastructure, cybersecurity, and the promotion of emerging technologies. Additionally, the budget may introduce policies to encourage the adoption of digital tools across various sectors.

5. Q: What sectors receive special attention in the Union Budget 2023-24?

A: The Union Budget 2023-24 prioritizes key sectors such as agriculture, education, and infrastructure development. It allocates substantial funds for rural development, irrigation projects, and initiatives aimed at improving the overall quality of education. The budget also outlines plans for major infrastructure projects to enhance connectivity and logistics across the country.

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