Union Budget 2023 by Finance Minister Nirmala Sitharaman

AUTHOR Lawgical India

PUBLISHED ON: Feb 02 2023

PUBLISHED IN: Legal Guides

Union Budget 2023

Each year, on February 1st, the Indian Finance Minister brings significant changes to startups, businesses, and entrepreneurship.

The Union Budget 2023-2024 has much importance as numerous issues are resolved that need priority. It has put much limelight on agriculture, job seeking, green energy, infrastructure, and reforming direct taxes to enhance an economy impacted by international slowdown while appeasing voters.

Infrastructure investments considerably influence growth and employment; the union budget 2023 raised the capital investment by 33% to 10 lakh crore INR.

Another essential feature of the Union Budget 2023 was the reformation of personal tax measures that would direct consumer expenditure income for middle-class people.

Further, the government highlights technology-driven investments, trying to decrease compliance costs and aid stakeholders in private investment in infrastructure. These aspects would boost the process of implementing business.

Under the supporting proposal, a Central Processing Centre will come into action to enhance the speed of reverts to companies by fusing the supervision of several forms filed with offices.

Even though the union budget 2023 did not bring any significant changes in the real estate industry, the Finance Ministry persisted in endorsing the government's mission of supporting reasonable housing, amplifying the expense for PM Awas Yojana by 66% to 79,000 crore INR.

On top of that, the Ministry proclaimed the formation of an Urban Infrastructure development fund that would pave the way for a generation of urban infrastructure in Tier III and Tier II cities of the country.

As India dedicated to net zero carbon emissions till 2070, green growth made a significant constituent of the budget proposals holding policies for proper energy use across numerous economic sectors.
Feasible development programs for green buildings, mobility, green fuel, and green farming would decrease the carbon value of the economy and create green job prospects.
In addition, the union budget 2023 declared the date extension of incorporation by one year for income tax advantages to startups, reinforcing India's role as an important international center for startups.
In another vital step, the budget endeavored to empower the digital ecosystem for skilling by launching a unified Skill India Digital platform that would enable demand-based formal skilling.
The government persevered on its Make in India journey by instigating the vision of "Make AI work for India and Make AI in India" by building three centers of superiority for Artificial Intelligence.
Best players in the industry will verify to implement research, stretch several disciplines, and generate ground-breaking solutions for health, agriculture, and sustainable cities.

This facet will magnify the AI ecosystem and promote talented professionals, enhancing the nation's endowment.

Moreover, the union budget 2023 mentioned its objective to build Data Embassies in the GIFT City IFSC for nations searching for digital permanence solutions. Additionally, the period of tax advantages to funds transferring to the GIFT City IFSC was outstretched till March 31st, 2025.

Direct Taxes

Scheme to instigate a future generation Common IT Return Form.
There is no modification in Income Tax apart from under Section 87A Rebate limit under Personal Income Tax is to be raised to 7 lakhs INR from the recent five lakhs INR in the novel tax regime. Hence, there is no variation in the old income tax regime.
Tax configuration in the novel personal income tax regime, in 2020 with six income slabs, to vary from decreasing it to five slabs and levelling up the tax exemption limit to 3 lakh INR from the present 2.5 lakhs INR.

The planned Slab rate for New Regime is as under:

Income (In INR) Price (In %)

Upto 300000 Nil
From 300001 till 600000 5%
From 600001 till 900000 10%
From 900001 till 1200000 15%
From 1200001 till 1500000 20%
Above 15,00,000 30%

As per the New Tax regime, the deduction for a salaried person is 50000 INR, and the family pension is 15000 INR.
The highest surcharge rate decreased from 37% to 25% in the union budget 2023, which resulted in a maximum personal income tax rate reduction of 39%.
The tax exclusion on leave encashment for the retirement of non-government employees raised to 25 lakhs INR from 3 lakhs INR.
The novel income tax regime is the default tax regime. The citizens can gain the advantage of the old tax regime.
the threshold limit under sections 44ADA and 44AD increased.
The business limit rose to 3 crores INR from 2 crores INR, and the professional limit amplified to 75 lakhs INR from 50 lakhs INR. 95% of the entire turnover/gross receipt is acquired online.
If the payment is not made to MSME units within the time according to MSME Act, then expense deduction on payments for MSMEs is permitted only when payment is made.
Novel co-operatives that begin manufacturing activities on March 31st, 2024, will avail the benefit of a lower tax rate of 15%, as access to the latest manufacturing companies.
Opportunity is given to sugar co-operatives to assert payments made to sugarcane farmers for the period before the assessment year 2016-17 as a disbursement.
Provision of a maximum limit of 2 lakhs INR for every member for cash deposits and loans in cash by Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) and Primary Agricultural Co-operative Societies (PACS).
A maximum limit of 3 crores INR for TDS on cash reimbursement to be given to co-operative societies.
Incorporation data for income tax advantages for startups to procure extension from March 31st, 2023, to March 31st, 2024.
Scheme to render the perk of carry forward of losses on the variation of shareholding of startups from seven years of incorporation to ten years.
Captain gains deduction on investment in residential houses under sections 54F and 54 to be limited at ten crores INR.
Scheme to restrict income tax exclusion from insurance policies proceeds where collective of premium for life insurance policies are above five lakhs INR with total premium up till 5 lakh INR will be excused off.
Income of boards, commissions, and authorities established by statutes of the State or Union for the objective of villages and towns, cities development, and housing are excluded from income tax.
Minimum limit of 10,000 INR for TDS to be eliminated, and taxability relevant to online gaming must be simplified. Scheme to bestow for TDS and taxability on net winnings at withdrawal time or the financial year-end.
Transformation of gold into the electronic gold receipt and vice versa must not be considered capital gain.
TDS rate to be decreased from 30% to 20% on the taxable part of EPF in non-PAN situations.
Disposal of 100 joint commissioners for clearance of small appeals to decrease the forthcoming appeals at the Commissioner level.
Tax benefits period to funds displacing to GIFT, IFSC city got an extension till March 31st, 2025.
Some acts of exclusion of liquidators according to section 276A of the Income Tax Act are to be legalized from April 1st, 2023.
Agniveer Fund will get EEE status. The payment acquired from the Agniveer Corpus Fund will be let off from taxes.
There is a deduction in evaluating the entire Income to the Agniveer on the contribution made by the Central Government or his Seva Nidhi account.

Indirect Taxes

The basic customs duty(indirect tax) rates on goods except agriculture and textiles came down to 13 from 21.
Few changes in the general cesses, surcharges, and customs duties on items like automobiles, toys, bicycles, and naphtha.
Excise duty-free from GST-compressed biogas in mixed, compressed natural gas.
Customs Duty on machinery for the production of the lithium-ion cell for usage in the battery of electrically operated vehicles (EVs) got an extension to March 31st, 2024.
Customs duty is not liable on sub-systems, vehicles, tyres, automobile components, or parts if imported by testing agencies for testing purposes and certification.
Camera lens customs duty and its parts/inputs for usage in the manufacture of camera modules came down to zero, and concessional Duty on lithium-ion cells for batteries got an extension for one year.
Customs duty decreased on open cell parts of TV panels to 2.5%.
Customs duty raised to 15 % from 7.5 % on electric kitchen chimney.
Customs duty on heat coil production for electric kitchen chimneys decreased to 15 % from 20 %.
Denatured ethyl alcohol used in chemical industry was excused from customs duty.
Customs duty decreased on acid-grade fluorspar (holding weight not less than 97 % of calcium fluoride) to 2.5 % from 5%.
Customs duty on crude glycerin - for usage manufacture of epichlorohydrin decreased to 2.5 % from 7.5%.
Duty mitigated on necessary inputs for the manufacture of shrimp feed.
Customs duty came down on seeds utilized to manufacture lab-grown diamonds.
Duties increased on articles created from bars of gold, platinum, and more.
Import duty on bars, silver dore, and articles raised.
Basic Customs Duty (BCD) exception on raw materials for the manufacture of ferrous scrap, CRGO Steel, and nickel cathode persisted.
Concessional BCD of 2.5% on copper scrap is persistent.
The basic customs duty rate was augmented to 25 % from 10 % or 30 per kg on compounded rubber.
National Calamity Contingent Duty (NCCD) on particular cigarettes by about 16 %.

Legislative Modifications In Customs Laws :

Customs Act, 1962 will be varied to denote a time limit of nine months from the filing date of application for executing order by the Settlement Commission.
Customs Tariff Act will be revised to elucidate the scope of provisions of Countervailing Duty (CVD), Anti-Dumping Duty (ADD), and Safeguard Measures.