Budget assessment

2023
Name: Sajal Khulbe

Roll no: 221410

Economics honours

HIGHLIGHTS OF
BUDGET 2023
-Direct Tax
Deemed Income
'Resident but Not Ordinarily Resident' person to pay taxes on money received (in
form of gift) from Residents if it is more than ₹50,000.

Changes in New Tax Regime

The new tax regime is now the default tax regime. The government has taken 5
key measures to make the new tax regime more attractive. However, taxpayers
have an option to choose the old tax regime.

• Change in new tax regime slabs for FY 2023-24 (AY 2024-25):

Income Slabs Income Tax Rate

Up to ₹ 3,00,000 Nil

5% on income which exceeds

₹3,00,000 - ₹6,00,000
₹3,00,000

₹15,000 + 10% on income more than

₹6,00,000 to ₹900,000
₹6,00,000

₹45,000 + 15% on income more than

₹9,00,000 to ₹12,00,000
₹9,00,000

₹90,000 + 20% on income more than

₹12,00,000 to ₹1500,000
₹12,00,000

₹150,000 + 30% on income more

Above ₹15,00,000
than ₹15,00,000

• Tax rebate on an income of up to ₹7 lakhs has been introduced under the

new tax regime. This means that taxpayers with an income of up to ₹7
lakhs will not have to pay any tax at all!
• Standard deduction:
 o Salary income: ₹50,000 standard deduction under the new tax
regime as well. Effectively, ₹7.5 lakhs is your tax-free income under
the new regime.
o Family pension: Standard deduction on such pension: ₹15,000 or
1/3rd of pension, whichever is lower.
• Highest surcharge under the new tax regime has been reduced to 25%
from 37% for people earning more than ₹5 crore. This move brings down
their tax rate from 42.74% to 39%.

Presumptive Taxation Limits Revised for FY

2023-24
Category Previous Limits Revised Limits

Sec 44AD: For small

₹2 crores ₹3 crores*
businesses

Sec 44ADA: For

professionals like
₹50 lakhs ₹75 lakhs*
doctors, lawyers,
engineers, etc.

*The increase in limits is subject to a condition that the 95% of the receipts must
be through online channels.
Start-ups
Start-ups Previous limit Revised limit

Date of incorporation
31.03.2023 31.03.2024
for income tax benefits

Time limit for set-off

7 years from 10 years from
and carry forward of
incorporation incorporation
losses

Only condition is that shareholders who hold at least 51% shareholding must
continue to hold the shares in the year such loss is to be carried forward and set-
off.

Co-operative Socities
Some of the proposals announced for co-operative Societies are:

• New manufacturing initiatives: The government has extended the benefit

of concessional tax rate of 15% to new co-operatives that commence
manufacturing by 31st March, 2024.
• Sugar co-operatives: Any expenditure that was disallowed to sugar co-
operatives prior to 2016-17, can be claimed now by making an application
to the Assessing Officer.
• Section 194N: TDS limit on cash withdrawals is increased to ₹3 crores for
co-operatives societies.
 • Cash deposit limit: Limit for cash deposits and loans by Primary
Agricultural Co-operative Societies (PACS) and Primary Co-operative
Agriculture and Rural Development Banks (PCARDBs) is being increased
to a maximum of ₹2,00,000 per member.

Agniveer Corpus Fund

To promote Agnipath scheme, the following changes will take place from 1st
April 2023:

• Contributions made by an Agniveer to the Agniveer Corpus Fund will be

considered a tax deduction from their income.
• The Central Government's contribution to the Agniveer Corpus Fund will
be considered as income for the Agniveer which will also be eligible for
deduction.
• Any amount received by an Agniveer or their nominee from the Agniveer
Corpus Fund will be tax-free.

Other Direct Tax Updates

• Leave Encashment: The exemption threshold for Leave encashment has
been increased to ₹25 lakh from ₹3 lakh for non-government employees.
Thus, at the time of retirement, leave encashment of up to ₹25 lakhs for a
maximum period of 10 months is tax-free under Section 10(10AA).
• TDS on EPF Withdrawal: TDS rate has been reduced to 20% from 30% on
taxable withdrawal of EPF.
• Payment Based Deduction: Payments to MSMEs must be made within the
time frame agreed upon in writing, with a maximum limit of 45 days. If
there is no written agreement, the time frame is 15 days. Any payment
 made outside this time frame can only be deducted (as expenditure) in the
year it is actually paid.
• No Penalty: Where a loan is accepted or repaid by a primary agricultural
credit society or a primary co-operative agricultural and rural development
bank to its members or vice versa, no penalty would arise under Section
269SS or 269ST.
• Capital Gains Exemption limit: The capital gains tax exemption under
Section 54 to 54F is restricted to Rs. 10 crores. Earlier, there was no
threshold.
• Online Gaming: Net winnings from online gaming will be taxed at 30%.
From 1 July 2023, TDS will be withheld on such net winnings (currently the
rate is 30%).
• Section 80G donations: Donations made to the following funds will not be
eligible for 80G deductions:
o Jawaharlal Nehru Memorial Fund
o Indira Gandhi Memorial Trust and
o Rajiv Gandhi Foundation

Revised time limits for completing

assessment
Assessment Time Limit

Scrutiny assessment & best judgment Within 12 months from the end of the
assessment assessment year (additional 12
 months if case referred to Transfer
Pricing officer)

Within 12 months from the end of the

Scrutiny assessment & best judgment
financial year in which such return is
assessment in case of updated return
filed

Fresh assessment post the ITAT Within 12 months from the end of the
order or revision order in case of financial year in which the order is
updated return passed

Assessments pending on date of

Additional 12 months from regular
initiation of search or requisition
due date
being made

-Indirect Tax
Customs Duty Changes
The indirect tax proposals made in Budget 2023 promote exports, encourage
domestic manufacturing, enhance domestic value addition, and boost green
energy and mobility.

The customs duties were revised on the following list of items-

Items of which customs duty was Impact/Benefit
revised

Imported capital goods for lithium-ion For greener mobility

battery manufacturing

Imported mobile camera lens Deepening value addition

Denatured ethyl alcohol Benefits the chemical industry

Primary inputs for making shrimp feed Increase in marine exports

Seeds for manufacturing lab-grown Promotes exports

diamonds

Extending the concessional Basic Increasing raw material availability for

Customs Duty (BCD) on copper scrap MSMEs

Compounding rubber to bring it at par To curb duty circumvention

with natural rubber

• National Calamity Contingent Duty (NCCD) on specified cigarettes was

increased.
• The customs duty for importing silver dore, bars and articles has been
increased to align them with that on gold and platinum. Further, the duty
on jewellery made from precious metals including gold, silver and platinum
is increased.
 • Extension is granted to the exemption from BCD on raw materials for
manufacturing CRGO Steel, ferrous scrap and nickel cathode.
• FM has reduced the basic customs duty on seeds used to manufacture
Lab Grown Diamonds (LGDs).
• The basic customs duty on the electric kitchen chimneys has been
increased.
• FM reduced the basic customs duty on parts of open cells of TV panels to
encourage domestic manufacturing of television.
• The customs duty exemption is being continued for the import of capital
goods and machinery that are used for manufacturing lithium-ion cells for
batteries in electric vehicles.
• Exemption is also granted for excise duty on GST-paid compressed bio-gas
used in blended compressed natural gas.
• Minor changes are carried out in the basic customs duties, cesses and
surcharges on certain consumables imported, such as toys, bicycles,
automobiles and naphtha.

GST Changes
• Section 10 stands amended such that a taxpayer can opt into the
composition scheme even if they are supplying goods through e-
commerce operators where TCS is collected under Section 52.
• Section 16 is amended for a condition that in cases where a recipient
taxpayer fails to pay to their supplier invoice value including the GST within
180 days from the date of issue of invoice, then they must pay with
interest computed under Section 50 on it.
• Section 17(5) is revised to include another item under ineligible ITC-
Expenditure on CSR initiative for corporates.
• High sea sales and similar transactions neither supply of goods or services
are considered exempt and hence ITC proportional to such sales cannot
be claimed as per revised Section 17(3).
• Sections 37, 39, 44, and 52 are amended to restrict taxpayers from filing
GSTR-1 (return for outward supplies), GSTR-3B (summary returns), GSTR-
9 (annual returns), and GSTR-8 (e-commerce operator) for a tax period
after the expiry of three years from the due date.
• Penalty of Rs.10,000 or an amount equivalent to the amount of tax
involved, whichever is higher will be charged for e-commerce operators
who-
o Allow an unregistered person to supply goods or services or both
through them except where such person is exempted from GST
registration.
o Allow any registered person from making inter-state supply of
goods/services through them where they are ineligible for it.
o Do not furnish accurate details in the GSTR-8 of any sale of goods
made through them by a person exempted from obtaining GST
registration.
• The following offences have been decriminalised-
o Where a person obstructs or prevents an officer in the discharge of
their duties under the CGST Act,
o Where a person tampers with or destroys material evidence or
documents,
o Where a person fails to supply information that is required to be
supplied under the CGST Act or Rules or supplies false information.
 • In regard to the compounding of offences, the limits have been changed to
25% of the tax involved up to a maximum amount of 100% of the tax
involved.
• A new section 158A has been inserted in the CGST Act to allow businesses
to now share GST data digitally with consent. It prescribes the manner and
conditions for sharing information furnished by a registered person on the
GST portal with such other systems as may be notified, as declared in-
o Returns filed under GSTR-1/3B/9, or
o Application of registration, or
o Statement of outward supplies, or
o Generation of an e-invoice or e-way bill, or
o Any other details, as may be prescribed.

Budget 2023 Highlights: Inclusive

Development
The government's policy of "Sabka Saath Sabka Vikas" has benefited various
sections of society, including women, SCs, STs, OBCs, and other underprivileged
groups. The budget will continue to build on those efforts.

Budget 2023 Highlights: Reaching the

last mile
• Building on the success of the Aspirational District program, government
launched
 • Proposed an outlay of Rs 15000 crores for the newly launched Pradhan
Mantri PVTG (Primitive Vulnerable Tribal Group) over next 3 years to
improve socio-economic conditions of the vulnerable tribal groups
• Outlay for PM Awaas Yojana was enhanced by 66% to over Rs 79,000
crores.
• In the next three years, the center plans to hire 38,800 teachers and
support staff for 740 Eklavya Model Residential Schools, which will cater
to 3.5 lakh tribal students.

Budget 2023 Highlights: Infrastructure

and investment
• Proposed capital expenditure is increased by 33% to Rs 10 lakh crore.
• 50-year interest free loan to state governmemnts will be extended for one
more year resulting in an outflow of rs 1.3 lakh crore.
• Planned outlay of Rs 2.4 lakh crore towards railways
• Fifty airports, heliports, water aerodromes, and advanced landing grounds
will be revived to enhance regional air connectivity.
• Urban Infrastructure Development Fund (UIDF) will be established with an
outlay of Rs 10,000 crore per annum to create urban infrastructure in Tier
2 and Tier 3 cities
Budget 2023 Highlights: Unleashing
the potential
• Vivad se Vishwas I: During the Covid period, if MSMEs failed to fulfill their
contracts, the government and its undertakings will refund 95% of the
forfeited amount relating to bid or performance security.
• KYC process will be streamlined and PAN card will be adopted as a single
identifier.
• A National Data Governance Policy will be introduced, providing access to
anonymized data for the purpose of research and innovation by startups
and academia.
• To improve the ease of doing business in India, 39,000 complinaces have
been reduced and 3,400 provisions have been decriminalised.
• Three centres of excellence for Artificial Intelligence (AI) will be set-up in
top educational institutions to achieve the vision of “Make AI in India and
Make AI work for India”.
• Unified filing process will eliminate the need for filing the same information
with different government departments. People will now be allowed to
voluntarily share the information with other government agencies over a
common portal.

Budget 2023 Highlights: "Green

Growth"
The government included "Green Growth" among the seven focus areas of this
year's Budget, with the aim of achieving net zero carbon emissions in India by
2070. To support this following announcements were made:
 • Green hydrogen: allocated Rs 19,700 crore for the National Green
Hydrogen Mission, which will promote a shift to low carbon intensity in the
economy, decrease reliance on fossil fuel imports and establish the
country as a technology and market leader in this growing industry.
• Energy transmission: Proposed construction of a transmission system of
13 GW renewable energy from Ladakh with a total investment of Rs
20,700 crore including central support of Rs 8,300 crore
• Green credit programme: Introduced green credit program to encourage
environmentally friendly behavior under the Environment Protection Act.
• Vehicle replacement: allocated funds for scrapping old vehicles owned by
the central government, and will also provide support to states in
replacing their old vehicles and state ambulance
• Energy transition: allocated Rs 35,000 crores for crucial capital
investments towards achieving energy transition, reaching net zero
targets, and enhancing energy security.
• Battery storage: Viability gap funding introduced for battery energy
storage systems with a capacity of 4,000 MWh

Budget 2023 Highlights: Youth power

• The PM Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth,
covering new-age courses.
• National Apprenticeship Promotion Scheme to provide stipend to 47 lakh
youth over next three years through Direct Benefit Transfer (DBT).
Budget 2023 Highlights: Financial
sector
• Revamp credit guarantee schemes for MSMEs will be implemented
starting 2023, with an infusion of Rs 9,000 crore. This will provide
additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the
cost of the credit will be reduced by nearly 1%
• To improve business operations in GIFT IFSC, government will Implement
a unified IT system for registration and approval from SEZ authorities,
IFSCA, GSTN, SEBI,RBI and IRDAI.
• Central Processing Center will be established to provide quicker responses
to businesses through centralized handling of various forms under the
Companies Act.
• Integrated IT portal will be established which will help investors to reclaim
unclaimed shares and unpaid dividends from the Investor Education and
Protection Fund Authority (IEPFA).
• 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 is valid till March 2025 and will fetch a fixed
interest rate of 7.5%.
• Senior Citizen Savings Scheme (SCSS) - The maximum investment limit
has been raised from Rs.15 lakh to Rs.30 lakh, with an interest rate of 8%
for the quarter ended 31st March, 2023.
• Postal Monthly Income Scheme (POMIS) - Investors under this scheme too
saw an increase in deposit limit from Rs.4.5 lakh to Rs.9 lakh for single
accounts and Rs.9 to Rs.15 lakh for joint accounts.
Budget 2023 Highlights: What’s
Cheaper and What’s Costlier?
What got cheaper What got costlier

Gold Travel by flights

Televisions Imitation jewellery

Smartphones Cigarettes

Compressed gas for EVs Silver

Lab-grown diamonds Bicycles

Lithium-ion batteries for mobile Electric kitchen chimney

phones

Industrial rubber
Budget 2023 Highlights: Key Numbers
and Budget Allocation
FY23 GDP growth estimated at 7%. To spend Rs 2,200 crore on high-value
horticulture crops as part of the Atmanirbhar Clean Plant Programme to enhance
the supply of superior, disease-free planting material.

The agricultural credit target will be increased to Rs 20 lakh crore.

• While the current fiscal deficit is 6.4% of GDP. the government aims to
bring it down below 4.5% of GDP by 2025-26.
• The government has stated that it will offer a 2% interest subsidy to help
farmers obtain short-term loans of up to INR 3 lakh at an effective interest
rate of 7% per year.
• The Reserve Bank of India (RBI) has increased the limit for collateral-free
agriculture loans from INR 1 lakh to INR 1.6 lakh.

Budget Estimates 2023-24

Concluding the Part-One of the General Budget, Ms Nirmala Sitharaman said that
the total receipts other than borrowings and the total expenditure are estimated
at Rs 27.2 lakh crore and Rs 45 lakh crore respectively. The net tax receipts are
estimated at Rs 23.3 lakh crore.

The fiscal deficit is estimated to be 5.9 per cent of GDP.

She said that in her Budget Speech for 2021-22, she had announced that
Government plans to continue the path of fiscal consolidation, reaching a fiscal
deficit below 4.5 per cent by 2025-26 with a fairly steady decline over the period.
She said that the Government has adhered to this path, and reiterated to bring the
fiscal deficit below 4.5 per cent of GDP by 2025-26.

Smt. Sitharaman said, to finance the fiscal deficit in 2023-24, the net market
borrowings from dated securities are estimated at Rs11.8 lakh crore. The balance
financing is expected to come from small savings and other sources. The gross
market borrowings are estimated at Rs 15.4 lakh crore.