Budget 2023 Highlights: PDF Download, Key Points

2 November 2023

687 12 mins read

Know all the budget 2023 highlights, and gather as many insights as possible on the same.

Introduction

The honorable finance minister Nirmala sitaraman on the 1st February 2021 in the parliament presented In 2021 to 2022 Union budget. The finance minister also gave the budget speech from 11 am to 1:00 pm. The current budget 2023 Highligts focuses on seven pillars that will help revive the economy. The seven pillars include:

Health and well-being.
Inclusive physical and financial capital development reinvigorating infrastructure human capital innovation and research and development.
Minimum government and maximum governance.

The budget also has come up with some regulations surrounding the securities market,
which would be proposed to be merged as one singular code.

Economic reforms and schemes present in the budget highlights for 2021 – 23

For the financial year 2021 to 2022, the overall expenditure regarding capital will be INR 5,54,000 lakh crore. The need of the hour is the healthcare sector’s improvement, so the finance minister has proposed a new centrally sponsored scheme, including the Pradhan Mantri Atma Nirbhar swatch Bharat yojana featuring the outlay of 64,180 crores over the next six years.

Furthermore, the budget has outlaid for health and well-being, estimated at around 2,23,846 crores for the financial year 2021 to 2022, which is a rise of 130% y to y basis. The increased allocation will likely expand and strengthen the existing national healthcare institutions’ health emergency operations, mobile hospitals, and the national center for Disease Control.

One of the essential highlights was the increase in the FDI limits in the insurance sector, which has increased from 49% to 74%. The government is also looking forward to divesting the two public sector units and one insurance company.

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Budget 2023 India

The Finance Minister boosted the capital spending for the financial year 2022 2023 through Budget 2023 by 35.4% to Rs 7.5 lakh crore from Rs 5.5 lakh crore the year prior, or Rs 2.5 lakh in Budget 2023 for this financial year 2023 2024.

Start-ups:

Start-ups	Old limit	New limit
Date of incorporation for income tax benefits	31.03.2023	31.03.2024
Time limit for set-off and carry forward of losses	7 years from incorporation	10 years from incorporation

Co-operative Societies

New Manufacturing Initiatives:

To encourage manufacturing activities within co-operative societies, the government has introduced a beneficial tax rate. Starting from the fiscal year 2023-2024, new co-operatives engaged in manufacturing will enjoy a concessional tax rate of 15%. This initiative aims to spur industrial growth and create employment opportunities while supporting the development of co-operative enterprises.

Sugar Co-operatives:

In a significant move, sugar cooperatives now have the opportunity to claim previously disallowed expenditures. This provision applies to expenditures incurred prior to the financial year 2016-17. Sugar cooperatives can submit an application to the Assessing Officer to avail themselves of this benefit. This step aims to provide relief to sugar co-operatives and enable them to address financial challenges effectively.

Section 194N: Increased TDS Limit on Cash Withdrawals:

To facilitate financial transactions for co-operative societies, the government has raised the threshold for Tax Deducted at Source (TDS) on cash withdrawals. Under Section 194N of the Income Tax Act, co-operative societies can now make cash withdrawals up to ₹3 crores without attracting TDS. This adjustment aims to simplify cash management for co-operatives and enhance their financial flexibility.

Cash Deposit Limit:

To support primary agricultural co-operative societies (PACS) and primary co-operative agriculture and rural development banks (PCARDBs), the government has increased the maximum limit for cash deposits and loans per member. PACS and PCARDBs can now accept cash deposits and provide loans up to ₹2,00,000 per member. This adjustment aims to empower rural communities, facilitate access to credit, and promote agricultural and rural development.

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Agniveer Corpus Fund

Starting from April 1, 2023, these changes aim to provide financial benefits to Agniveers and foster their engagement in the scheme.

Tax Deduction for Agniveer Contributions:

To incentivize Agniveers and encourage their contributions, any amount donated by an Agniveer to the Agniveer Corpus Fund will be considered a tax deduction from their income. This deduction allows Agniveers to reduce their taxable income, potentially lowering their overall tax liability. This provision aims to promote active participation in the scheme and support the growth of the Agniveer community.

Central Government’s Contribution as Taxable Income:

In a unique approach, the Central Government’s contribution to the Agniveer Corpus Fund will be considered as income for the Agniveer. However, this income will also be eligible for deduction, providing a tax benefit to Agniveers. This step acknowledges the significance of the government’s support and ensures that Agniveers can avail themselves of tax benefits on the contributions received from the government.

Tax-Free Amounts from Agniveer Corpus Fund:

To provide financial relief to Agniveers and their nominees, any amount received from the Agniveer Corpus Fund will be tax-free. This exemption aims to ease the financial burden on Agniveers during critical periods and ensures that the funds received are available for their intended purposes. By making these amounts tax-free, the government acknowledges the importance of supporting Agniveers in times of need.

GST Changes

Composition Scheme for E-commerce Operators:

Section 10 of the GST Act has been amended to allow taxpayers to opt into the composition scheme even if they supply goods through e-commerce operators where Tax Collected at Source (TCS) is collected under Section 52. This change provides flexibility for taxpayers engaged in e-commerce activities and simplifies their tax obligations.

Interest on Delayed Payments:

Under the revised Section 16, a condition is introduced where recipients of goods/services must pay the invoice value, including GST, to their suppliers within 180 days from the date of issue of the invoice. Failure to comply will result in interest being levied under Section 50. This provision encourages timely payments and discourages delayed payments that may impact suppliers’ working capital.

Ineligible Input Tax Credit (ITC) for CSR Expenditure:

Section 17(5) has been revised to include expenditure on Corporate Social Responsibility (CSR) initiatives as ineligible for claiming ITC. This change ensures that ITC cannot be availed on expenses related to CSR activities undertaken by businesses.

High Sea Sales and Exempt Transactions:

According to the amended Section 17(3), high sea sales and similar transactions that do not qualify as supplies of goods or services are considered exempt. As a result, taxpayers cannot claim ITC proportional to such sales. This change clarifies the treatment of high sea sales under GST.

Time Limit for Filing Returns:

Sections 37, 39, 44, and 52 have been amended to restrict taxpayers from filing certain returns after three years from the due date. GSTR-1 (return for outward supplies), GSTR-3B (summary returns), GSTR-9 (annual returns), and GSTR-8 (e-commerce operator) for a tax period can no longer be filed after the expiration of the specified time limit. This amendment emphasizes timely compliance and adherence to filing deadlines.

Penalties for E-commerce Operators:

E-commerce operators will face penalties if they allow unregistered persons to supply goods or services through their platforms, facilitate ineligible inter-state supplies, or provide inaccurate details in the GSTR-8 regarding sales made by exempted persons. The penalties include a minimum of Rs. 10,000 or an amount equivalent to the tax involved, whichever is higher. These penalties aim to ensure compliance and accountability in e-commerce transactions.

Decriminalization of Offenses:

Certain offenses under the GST Act have been decriminalized. These include obstructing or preventing an officer in the discharge of their duties, tampering with or destroying material evidence or documents, and failure to supply required information or supplying false information. This change aims to strike a balance between compliance and reducing the burden of criminal prosecution.

Compounding of Offenses:

The limits for compounding offenses have been revised to 25% of the tax involved, up to a maximum amount of 100% of the tax involved. This change provides more flexibility in resolving offenses through compounding, subject to specified limits.

Digital Sharing of GST Data:

A new Section 158A has been inserted in the CGST Act, allowing businesses to digitally share GST data with consent. This provision outlines the manner and conditions for sharing information furnished by a registered person on the GST portal with other systems as notified. It applies to various aspects such as returns, registration applications, outward supplies statements, e-invoice generation, and prescribed details.

Budget 2023 Highlights: Infrastructure and investment

The Budget 2023 introduces several measures aimed at enhancing infrastructure development and encouraging investment. Here are the key highlights:

Increased Capital Expenditure: The proposed capital expenditure has been raised by 33% to Rs 10 lakh crore. This significant increase demonstrates the government’s commitment to investing in infrastructure projects across the country.

Extension of Interest-Free Loans: The 50-year interest-free loan provided to state governments will be extended for an additional year, resulting in an outflow of Rs 1.3 lakh crore. This measure aims to support state governments in financing their development initiatives.

Railway Development: A planned outlay of Rs 2.4 lakh crore has been allocated towards railways. This investment will contribute to the modernization and expansion of railway infrastructure, ensuring safer and more efficient transportation.

Revival of Airports and Connectivity: Fifty airports, heliports, water aerodromes, and advanced landing grounds will be revived to enhance regional air connectivity. This initiative seeks to improve accessibility and boost economic development in remote areas.

Urban Infrastructure Development Fund (UIDF): The establishment of the UIDF with an annual outlay of Rs 10,000 crore aims to create urban infrastructure in Tier 2 and Tier 3 cities. This fund will support the development of crucial amenities and enhance the quality of life in these cities.

Budget 2023 Highlights: Financial sector

Financial Sector Reforms:

Revamped Credit Guarantee Schemes for MSMEs: Starting from 2023, credit guarantee schemes for MSMEs will be revamped with an infusion of Rs 9,000 crore. This will enable collateral-free guaranteed credit of Rs 2 lakh crore, reducing the cost of credit by approximately 1%.
Streamlining Business Operations in GIFT IFSC: A unified IT system will be implemented to facilitate registration and approval from SEZ authorities, IFSCA, GSTN, SEBI, RBI, and IRDAI. This step aims to improve business operations in the Gujarat International Finance Tec-City (GIFT) International Financial Services Centre (IFSC).
Central Processing Center for Companies Act: A centralized processing center will be established to provide quicker responses to businesses by handling various forms under the Companies Act. This measure aims to streamline administrative processes and enhance efficiency.
Integrated IT Portal for Investor Reclaim: An integrated IT portal will be established to help investors reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority (IEPFA). This initiative seeks to simplify the reclaim process and ensure investor protection.

Financial Savings Schemes:

Mahila Sanman Savings Certificate: A one-time deposit scheme for women, with a maximum deposit of Rs 2 lakh and a tenure of up to two years, has been introduced. This scheme, valid until March 2025, offers a fixed interest rate of 7.5% to empower women financially.
Senior Citizen Savings Scheme (SCSS): The maximum investment limit for SCSS has been raised from Rs 15 lakh to Rs 30 lakh. This scheme provides senior citizens with an interest rate of 8% for the quarter ending March 31, 2023.
Postal Monthly Income Scheme (POMIS): The deposit limits for POMIS have been increased from Rs 4.5 lakh to Rs 9 lakh for single accounts and from Rs 9 lakh to Rs 15 lakh for joint accounts. This change allows investors to maximize their savings under this scheme.

Budget 2023 Highlights: Youth power

PM Kaushal Vikas Yojana 4.0: A new version of the PM Kaushal Vikas Yojana will be launched, focusing on skilling lakhs of youth in new-age courses. This initiative aims to equip the youth with relevant skills to meet the demands of the evolving job market.
National Apprenticeship Promotion Scheme: The scheme will provide stipends to 47 lakh youth over the next three years through Direct Benefit Transfer (DBT). This measure encourages apprenticeship opportunities and supports skill development.

Budget 2023 Highlights: Key Numbers and Budget Allocation

The Budget 2023 presents several key numbers and allocations across various sectors. Here are the highlights:

GDP Growth Estimate: The GDP growth for the fiscal year 2022-2023 is estimated at 7%. This projection indicates the government’s expectation for economic expansion during this period.
High-Value Horticulture Crops: An allocation of Rs 2,200 crore has been made for the Atmanirbhar Clean Plant Programme, focusing on high-value horticulture crops. This program aims to enhance the supply of superior, disease-free planting material, thereby promoting agricultural productivity and quality.
Agricultural Credit Target: The agricultural credit target is set to be increased to Rs 20 lakh crore. This move is intended to provide farmers with easier access to credit, enabling them to invest in agricultural activities and improve their productivity.
Fiscal Deficit Reduction: While the current fiscal deficit stands at 6.4% of GDP, the government aims to bring it down below 4.5% of GDP by the fiscal year 2025-2026. This goal reflects the government’s commitment to fiscal consolidation and prudent financial management.
Interest Subsidy for Farmers: The government plans to offer a 2% interest subsidy to farmers, facilitating their access to short-term loans of up to INR 3 lakh. This subsidy will effectively reduce the interest rate to 7% per year, making credit more affordable for farmers.
Collateral-Free Agriculture Loans: The Reserve Bank of India (RBI) has increased the limit for collateral-free agriculture loans from INR 1 lakh to INR 1.6 lakh. This change aims to ease the burden of collateral requirements for farmers, enabling them to access credit more easily.

These budget allocations and numbers reflect the government’s focus on supporting agricultural development, reducing fiscal deficits, and providing financial assistance to farmers. The measures are designed to stimulate economic growth, enhance productivity in the agricultural sector, and improve access to credit for farmers.

Direct Tax Proposals Featuring The Budget Highlights 2022 – 23

Some direct tax proposals were also introduced, relaxing the individual taxpayers and start-ups to some extent. The individual and corporate tax rates were unchanged for 2021 to 2022. The limit for taxation audits under section 44 AB has been enhanced from INR 5,00,00,000 to INR 10,00,00,000, which is a significant move. Only 195% of the payments are digitized, which provides considerable relief to several corporate houses. The proposed amendments are as follows.

IT Relaxation For Senior Citizens Above The Age of 75 First Stop

It has been proposed to exempt all senior citizens from filing Income tax returns if the pension and interest income are their only animal income sources. Section 194 P has been inserted newly to enforce the bank to deduct some tax on the senior citizens above the age of 75 and have only pension and interest income from the bank.

Reduction In Time For The Income Tax Proceedings

Assessment proceedings in the rest of the cases will be reopened only for three years except in the case of serious tax evasion. The time limit earlier was six years. Constitute dispute resolution committee

Those assisting with a taxable income of more than 50,00,000 for small and medium taxpayers and only disputed income of INR 10,00,000 can approach the committee provided under Section 245 ma and settle the issue at the best stage.

National Faceless Income Tax Appellate Tribunal Center

It will help reduce the taxpayer’s compliance cost and enhance transparency in the disposal of further appeals. This will also help in achieving some distribution of work on various benches. The main reason is that this will help in ensuring efficient administration.

Tax Initiatives For Start-ups

The start-up tax holiday is extended for one more year, that is, till 31st March 2022.

Relaxations

There is a proposal to notify all the rules and regulations for removing the challenges of double taxation.

Pre-Filing Of Returns Must Be the Forefront

The pre-filing would be allowed for Tax payment, salary TDs, etc… Additionally, details of all the Capital gains From listed securities dividend income would be pre-filled.

Disallowance Of The PF Contribution

the PF contribution will not get allowed – deduction for the employer in the case where the Provident fund of the employee was deducted but not deposited by the concerned employer.

Section 43 CA.

The value of stamp duty would be 120% of the consideration if any residential unit transfers, meaning an independent housing unit is made anywhere between 12th November 2020 and 30th June 2021.

Amendment to Section 44ada

This section will be applied to assess who are residents in India. It applies to all the resident individual Hindu undivided families a partnership firm another LLP.

Section 80

The affordable housing additional direction is now extended till 31st March 2022.

Indirect Tax Proposals

The few items on which the custom duty rates are revised are given here:

On copper scrap, the duty is reduced from 5% to just 2.5%.
Primary and special additional excise duty on petrol and high-speed diesel oil is reduced.
Solar inverter’s duties increased from 5% to 20%.
Duty on solar Lanterns is increased from 5% to 15%.
The essential customs duty on silver and gold is reduced.
The department will now rationalize the duty on textile chemicals instead of other products.
The revised rates would be applicable from 2nd February 2021.
The customs duty is increased regarding agricultural products, including cotton, silk, and alcohol.

Budget 2023 Expectations

Salaried individuals make up a significant portion of taxpayers, as per the income tax department. In 2022, approximately half of the filed income tax returns (ITRs) were ITR-1 forms submitted by salaried individuals. However, these individuals have had limited reasons for celebration in recent budgets, apart from the introduction of the new tax regime. Given the challenges they have faced, including layoffs, reduced salaries, increasing inflation, and concerns about a global recession, salaried individuals have certain expectations that they hope will be addressed in the upcoming budget.

Conclusion:

Social welfare surcharge on the value imposed on gold and silver is exempted from social welfare surcharge. Hence the items would attract some charge on the importance of an additional essential customs duty.

Hence this is all you need to know about the budget highlights. If you want to know more about the budget: https://www.indiabudget.gov.in/ for 2021, then the experts at Vakilsearch could be of perfect help here.

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Budget 2023 Highlights: Key Takeaways, Important Points

Know all the budget 2023 highlights, and gather as many insights as possible on the same.

Introduction