Budget 2023 Highlights By Industry Verticals
- Published | 01 February 2023
The Union Budget 2023–24 (FY24) is focused on rural India and infra sector. It is expected to increase rural and agricultural spending by $10 billion, or 15%, above FY23. Over the course of the current fiscal, it is probable that public capex will continue to expand by a significant 20%. Due to its election-focused budget, the government is unlikely to go above its permitted spending limits. In FY24, the burden of subsidies is projected to decrease dramatically, freeing up more financial resources to reallocate funds to already-existing rural programmes, such as the MGNREGA programme for rural jobs, rural housing, and roads, among others.
Priorities of the Budget
The Budget adopts the following seven priorities: Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power, and Financial Sector. They complement each other and act as the ‘Saptarishi’ guiding the nation through the Amrit Kaal.
Budget 2023 Highlights
Direct Taxes - Income Tax
- The new tax system's standard deduction benefit is being extended to retirees. Each salaried individual making at least Rs. 15.5 lakhs per year will receive Rs. 52,500 in benefits. Instead of paying the current Rs. 60,000, a person making Rs. 9 lakhs per year will now just be required to pay Rs. 45,000. Similar to this, only 10% of someone earning Rs. 15 lakhs would now be taxed.
- In terms of personal income tax, there is no tax on income between Rs. 0 and Rs. 3 lakhs, 5% tax on income between Rs. 3 lakhs and Rs. 5 lakhs, 10% tax on income between Rs. 6 lakh and Rs. 9 lakhs, 20% tax on income between Rs. 12 lakhs and Rs. 15 lakhs, and 30% tax on income over Rs. 15 lakhs.
- A declaration that the new tax system would now be the default tax system and an increase in the income tax rebate maximum from Rs. 5 lakhs to Rs. 7 lakhs. Additionally, the budget suggested changing the tax system under this regime by decreasing the number of tax slabs to 5 and raising the threshold for tax exemptions to Rs. 3 lakhs.
- The budget suggests increasing the tax exemption on leave encashment for salaried non-government workers upon retirement from Rs. 3 lakhs to Rs. 25 lakhs.
- For income up to Rs. 3 lakhs, there will be no tax. For income between Rs. 3-6 lakh, 5% tax will be levied; the highest tax rate under the new I-T system will be 30% for income beyond Rs. 15 lakhs.
Indirect Taxes - GST & Customs
- A reduction in customs taxes on the import of specific components used in the production of mobile phones. India's mobile phone production increased from 5.8 crore units in 2014–15 to 31 crore units in the most recent fiscal year, placing India as a global electronics powerhouse as international players seek a China plus 1 strategy.
- Indirect tax plans seek to support exports, domestic manufacturing, value addition, green energy, mobility, and exports.
- A more straightforward tax system with lower tax rates lessens the burden of compliance and enhances tax management. Other than textiles and agriculture, reducing the number of basic customs duty rates on items from 21 to 13. The basic custom taxes, cess, and surcharges on various commodities, such as toys, bicycles, cars, and naphtha, have therefore undergone small adjustments.
- The agriculture credit target will be increased to Rs. 20 lakh crore with focus on animal husbandry, dairy and fisheries.
- The construction of digital public infrastructure for agriculture will be an open public benefit that is open source, interchangeable, and standard. Thus enabling solutions that are inclusive and focused on the needs of farmers, including greater access to farm inputs, loans, and pertinent information services for crop planning and health insurance, assistance with crop forecasting, market knowledge, and assistance with expansion of the agri-tech sector and new businesses.
- Agri startups by young businesspeople in rural areas will be encouraged through the establishment of an agriculture accelerator fund. The Fund's goal is to provide farmers with creative, cost-effective solutions to their problems. Modern technologies will also be introduced, changing farming practices and boosting production and profitability.
- Through Public Private Partnerships, a cluster-based and value chain approach will be used to increase the production of extra-long staple cotton (PPP). Collaboration between farmers, the government, and business will be required for input supply, extension services, and market connections.
- An “Atmanirbhar Clean Plant Program” will be launched to boost the availability of disease-free, quality planting material for high value horticultural crops at an outlay of Rs. 2,200 crore.
- A new sub-plan of the PM Matsya Sampada Yojana with a targeted investment of Rs. 6,000 crore to support the activities of fishers, fish vendors, and micro & small businesses even more, increase value chain efficiency, and broaden the market.
Health, Education, and Skilling
- Alongside the 157 medical colleges that have already been operating since 2014, 157 new nursing colleges will also be founded.
- By 2047, a mission will be begun to end sickle cell anemia through joint efforts of central ministries and state governments, it will involve raising awareness, universal screening of 7 crore persons in the age range of 0–40 years in the impacted tribal areas, and counselling.
- Faculty from public and private medical colleges as well as R&D teams from the corporate sector will have access to facilities in a few ICMR Labs to conduct research in an effort to promote joint research and innovation.
- Through centres of excellence, a new initiative to encourage pharmaceutical research and innovation will be implemented. The budget also persuade business to spend money on R&D in a few chosen priority fields.
- In order to guarantee the availability of trained labour for cutting-edge medical technology, high-end production, and research, dedicated multidisciplinary courses for medical devices will be supported in existing institutions.
- Through creative pedagogy, curriculum change, ongoing professional development, dipstick surveys, and ICT implementation, teachers' training will be reimagined. For this reason, the District Institutes of Education and Training will grow into thriving centres of excellence.
- For the purpose of facilitating accessibility to high-quality books across platforms and languages, genres, and reading levels, a national digital library for kids and teens will be established. States will be urged to establish physical libraries for them at the ward and panchayat levels and to provide the necessary infrastructure for them to access the National Digital Library's resources.
- Additionally, the National Book Trust, Children's Book Trust, and other sources will be urged to donate and replenish non-curricular titles in regional languages and English to these physical libraries in order to foster a culture of reading and make up for learning loss during the pandemic. This programme will also involve cooperation with non-governmental organisations that promote literacy.
- Due to the government's many initiatives, such as the Phased Manufacturing programme, India's output of mobile phones has surged from 5.8 crore units valued at roughly Rs. 18,900 crore in 2014–15 to 31 crore units valued at more than Rs. 2,75,000 crore in the most recent financial year. In order to further enhance domestic value addition in the production of mobile phones, the budget proposes to reduce customs duties on the import of specific components and inputs, such as camera lenses, and to extend the concessional duty on lithium-ion cells for batteries for another year.
Chemicals & Petrochemicals
- In the chemical industry, denatured ethyl alcohol is used. The budget proposes to waive the applicable basic customs charge. Additionally, this will aid in effort to move to a cleaner energy source and support the ethanol blending programme. To increase the competitiveness of the domestic fluorochemicals industry, the basic customs tariff on acid grade fluorspar is also being decreased from 5% to 2.5%. Additionally, it is planned to lower the basic customs duty on crude glycerin used to make epicholorhydrin from 7.5% to 2.5%.
- Marine items experienced the biggest export growth in the previous fiscal year, which benefited farmers in the nation's coastal areas. Duty on essential components used to manufacture domestic shrimp feed is being decreased in order to further improve the export competitiveness of marine products, particularly shrimps.
- The limits for micro enterprises and professionals have been enhanced in the Union Budget 2023 to avail benefits of presumptive taxation and 95% of the receipts to be non-cash.
- Presumptive taxation is available to microbusinesses with annual revenue up to Rs. $2 crore and some professions with annual revenue up to Rs. 500,000 in some cases.
- Government and government undertakings would reimburse 95% of the forfeited sum related to bid or performance security to MSMEs in circumstances where they fail to fulfil contracts during the Covid term. MSMEs will benefit from this.
- The budget suggested moving up the date of incorporation for startups in order to qualify for income tax incentives from 31.03.23 to 31.3.24. Additionally, it recommended extending the benefit of loss carryover for startups changing their shareholding from seven to ten years after incorporation.
Banking and Digital Banking
- Certain changes to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are planned in order to increase investor protection and improve bank governance.
- Digital payments are still widely accepted. They demonstrate a 76% rise in transactions and a 91% increase in value in 2022. In 2023–2024, financial support for this public digital infrastructure will continue.
- A capital outlay of Rs. 2.40 lakh crore has been provided for the Railways. This highest ever outlay is about 9 times the outlay made in FY2013–14.
- The newly created Infrastructure Finance Secretariat will work with all stakeholders to encourage more private investment in infrastructure, particularly in sectors like power, roads, and trains that rely heavily on public funds.
- The Pradhan Mantri PVTG Development Mission will be implemented to ameliorate the socioeconomic circumstances of the especially vulnerable tribal groups (PVTGs). By doing this, essential amenities including secure housing, access to clean water and sanitation, improved health and nutrition, road and telecommunication connectivity, and chances for sustainable livelihoods will be provided to PVTG families and habitations. Under the Development Action Plan for the Scheduled Tribes, a sum of Rs. 15,000 crore will be made available to carry out the Mission over the course of the following three years.
- The outlay for PM Awas Yojana is being enhanced by 66% to over Rs. 79,000 crore.
- For last and first mile connectivity for the ports, coal, steel, fertilizer, and food grains industries, 100 important transport infrastructure projects have been identified. With a total investment of Rs. 75,000 crore, including Rs. 15,000 crore from private sources, they would be given priority.
- To increase regional air connectivity, 50 more airports, heliports, water aerodromes, and advanced landing grounds will be revived.
- All cities and municipalities will be able to switch from manhole to machine-hole mode for septic tanks and sewers by 100% mechanical desludging. A stronger emphasis will be placed on scientific waste management for both dry and moist waste.
- Plans for civil servant capacity-building are being developed and put into action by the Center, States, and Union Territories as part of Mission Karmayogi. To help lakhs of government workers update their skills and promote a people-centric attitude, the government has also launched an integrated online training platform called iGOT Karmayogi.
- Digital public infrastructure, which includes Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack, and UPI, has made fintech services in India more accessible. The range of documents that are accessible to persons in DigiLocker will be increased in order to facilitate more innovative Fintech services.
- An object MSMEs, big businesses, and charitable trusts will all be able to use DigiLocker once it is set up. This will be done in order to securely store and share documents with various authorities, regulators, banks, and other corporate organizations whenever necessary.
- In order to realise a new variety of options, business models, and employment potential, engineering colleges will construct approximately 100 labs for developing applications employing 5G services. The labs will address a variety of topics, including applications for smart classrooms, precision agriculture, intelligent transportation systems, and health care.
- Through PPP mode with viability gap finance, coastal shipping will be marketed as the more economical and energy-efficient mode of transportation, both for passengers and freight.
- Through the challenge mode, at least 50 locations will be chosen using an integrated and creative strategy. To improve the tourist experience, all pertinent information would be made available on an App in addition to factors like physical and virtual connectivity, tourist guides, high standards for food streets, and tourists' security. Each place would receive a full development. Both domestic and international tourists will be the emphasis of the tourism industry's development.
- To accomplish the goals of the "Dekho Apna Desh" project, sector-specific skilling and entrepreneurial development will be integrated. The prime minister used this as a platform to urge the middle class to favor domestic travel over overseas travel. The "Swadesh Darshan Scheme" was also introduced for the coordinated development of theme-based tourist circuits. Border villages will also have access to tourist infrastructure and facilities through the Vibrant Villages Program.
e-Vehicles & Energy
- With a budget of Rs.19,700 crore, the recently established National Green Hydrogen Mission will aid in the transition of the economy to one with a low carbon intensity, lessen reliance on imports of fossil fuels, and enable the nation to assume technological and market leadership in this emerging industry. By 2030, the country hope to have a 5 MMT annual production rate.
- This budget allocates Rs. 35,000 crore to the Ministry of Petroleum and Natural Gas for high-priority capital projects related to energy transition, net zero goals, and energy security.
- The construction of the interstate transmission line for the removal and grid integration of 13 GW of renewable energy from Ladakh will cost Rs. 20,700 crore, including Rs. 8,300 crore in federal funding.
- A Green Credit Program will be announced in accordance with the Environment (Protection) Act in order to promote behavioral change. This would encourage ecologically responsible behavior on the part of businesses, people, and local organizations while also assisting in the mobilization of additional resources for such efforts.
- A key component of greening our economy is replacing obsolete, harmful vehicles. The budget has provided sufficient funding to scrap outdated Central Government vehicles in support of the vehicle scrapping programme outlined in the Budget 2021–22. States will receive assistance in replacing outdated cars and ambulances.
- To encourage the use of green fuel, blended compressed natural gas is exempt from central excise tax in the proportion of the amount equivalent to the GST paid on the biogas or compressed biogas it contains.
- A Green Credit Program will be announced in accordance with the Environment (Protection) Act in order to promote behavioral change. This would encourage environmentally responsible behavior from businesses, people, and local government entities and help mobilize additional resources for such efforts.
- In order to encourage States and Union Territories to promote alternative fertilisers and balanced use of chemical fertilisers, the "PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth" will be introduced.
- 500 new "waste to wealth" facilities will be built as part of the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) programme to advance the circular economy. There will be 300 community-based or cluster-based plants, 200 compressed biogas (CBG) plants, with a total investment of 10,000 crore, 75 of which will be in metropolitan areas. A 5% CBG obligation will eventually be imposed on all businesses that market natural and biogas. The proper financial support will be given for the distribution of bio-manure and the collecting of bio-mass.
- One crore farmers would receive assistance in adopting natural farming during the next three years. 10,000 Bio-Input Resource Centers will be established for this, resulting in the development of a distributed national micro-fertilizer and pesticide manufacturing network.
- By combining funding from MGNREGS, CAMPA Fund, and other sources, the "Mangrove Initiative for Shoreline Habitats & Tangible Incomes," or MISHTI, will be implemented to plant mangroves wherever it is viable along the coastline and on salt pan areas.
- Wetland environments are essential for maintaining biological diversity. The Prime Minister stated that there are now 75 Ramsar sites in our nation in his most recent Mann Ki Baat. Prior to 2014, there were just 26..." Conservation activities have always been led by local communities. Through Amrit Dharohar, a programme that will be implemented over the next three years to encourage optimal use of wetlands and improve biodiversity, carbon stock, ecotourism opportunities, and income production for local populations, the government will promote their distinctive conservation characteristics.
- National Education Policy, placed an emphasis on skill development, established economic policies that facilitate the creation of jobs at scale, and encouraged entrepreneurial possibilities in order to empower our youth and assist the "Amrit Peedhi" in realising their aspirations.
- Within the following three years, the Pradhan Mantri Kaushal Vikas Yojana 4.0 will be introduced to train thousands of young people. Emphasis will be placed on on-the-job training, industry partnerships, and course alignment with industry requirements. As part of Industry 4.0, the programme will also encompass cutting-edge training in coding, artificial intelligence, robotics, mechatronics, IOT, 3D printing, drones, and soft skills. 30 Skill India International Centers will be built throughout various States to prepare kids for possibilities abroad.
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