Thursday, 02 February 2023 | PNS | New Delhi
Tax relief for the middle class, huge allocation for infrastructure and education sectors, revival of 50 airports, and a major leg up to auto sectors were some of the key highlights of the Union Budget 2023-24 presented by Finance Minister Nirmala Sitharaman on Wednesday.
In a relief for the middle class, the Finance Minister announced that those with an annual income of up to Rs. 7 lakh will pay no tax under the new tax regime. However, she made no changes for those who would prefer to continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.
For high salaried people, Sitharaman reduced surcharge from 37 per cent to 25 per cent for high net worth individuals with income above Rs. 2 crore. This would translate into a saving of around `20 lakh for those having a salary income of about Rs. 5.5 crore.
In what is being seen as a push for salaried class taxpayers to switch to a new tax regime where no exemptions on investments is provided, the Finance Minister in her Budget allowed a standard deduction of Rs. 50,000 under the new regime.
The old tax regime provides for a similar deduction and no tax on income up to Rs 5 lakh. Also, the basic exemption limit has been raised to Rs. 3 lakh from RS. 2.5 lakh. A Rs 2.5 lakh basic exemption limit was prescribed in the old tax
regime.
The move will lead to a saving of Rs. 33,800 for those earning up to Rs. 7 lakh annually and opting for a new tax regime. Those with income up to Rs. 10 lakh would save Rs. 23,400 and Rs. 49,400 saving would accrue to those earning up to Rs. 15 lakh.
In her Budget speech, Sitharaman said currently individuals with a total income of up to `5 lakh do not pay any tax due to rebate.
“It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to Rs. 7 lakh,” Sitharaman said, adding that the number of slabs would be reduced to five.
Under the revamped new tax regime, no tax would be levied for income up to Rs. 3 lakh. Income between Rs. 3-6 lakh would be taxed at 5 per cent; Rs. 6-9 lakh at 10 per cent, Rs. 9-12 lakh at 15 per cent, Rs. 12-15 lakh at 20 per cent and income of Rs. 15 lakh and above will be taxed at 30 per cent.
“I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs. 15.5 lakh or more will thus stand to benefit by Rs. 52,500,” Sitharaman said.
The Government in the Budget 2020-21 brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail specified exemptions and deductions, like house rent allowance (HRA), interest on home loan, investments made under Section 80C, 80 D and 80 CCD. Under this, total income up to Rs 2.5 lakh was tax exempt.
Currently, a 5 per cent tax is levied on total income between Rs2.5 lakh and Rs5 lakh, 10 per cent on Rs5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs. 10 lakh to Rs. 12.5 lakh, 25 per cent on Rs. 12.5 lakh to Rs. 15 lakh, and 30 per cent on above Rs 15 lakh.
In her post-Budget interaction with the media, the FM said the Government has made the new income tax regime more attractive for taxpayers and has thus brought about “substantial changes” in its structure for the benefit of the middle class.
“The personal income tax has had substantial changes (in the Budget) which will benefit the middle class. The new taxation regime has now got greater traction and incentive so that people can now unhesitatingly move to the new regime from old,” the Finance Minister said.
Sitharaman said the Government wants to make the new tax regime attractive enough and compliance should not be burdensome on taxpayers. However, if someone feels the old regime is more beneficial, he/she can continue in it.
“The ultimate interest is to make the simpler (new) regime more attractive,” Sitharaman said. Revenue Secretary Sanjay Malhotra said majority of taxpayers would find it more attractive to shift to the new regime. Malhotra, however, did not give details on the number of taxpayers who have migrated to the new tax regime since 2020-21.
The FM has made a determined effort to arrive at a fiscal deficit level below 4.5 per cent of the GDP by 2025-26. For 2023-24, the Finance Minister has fixed the deficit at 5.9 per cent below the 6.4 per cent budgeted for 2022-23. Fiscal deficit for 2021-22 was 6.7 per cent, lower than 6.9 per cent in the revised Budget estimates.
“In my Budget Speech for 2021-22, I had announced that we plan 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. We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26,” Sitharaman said. The Budget focused on energy transition with an outlay of Rs 35,000 crore to encourage green mobility with initiatives like vehicle scrappage police, hydrogen fuel and electric vehicles. Sitharaman announced that the subsidies on Electric Vehicle batteries will be extended for one more year, hence manufacturing of EVs cheaper in India. Sitharaman said she has allocated adequate funds to scrap old vehicles owned by Central Government, and States will also be supported in replacing old vehicles and ambulances. Presenting the Budget for 2023-24, she said replacing old polluting vehicles is an important part of greening the economy.
The Budget has laid massive thrust on building road, rail and ports infrastructure in the Union Budget announced on Wednesday. While the biggest gainer of this year’s Budget is Indian Railways with the highest ever capital outlay of Rs 2.40 lakh crore, The Finance Minister also increased the allocation for the roads and highways sector with an enhanced outlay of Rs 2.70 lakh crore
The outlay for the railways is nine times the amount provided in 2013-2014. Till 2014, Railways’ capital expenditure was barely Rs 45,980 crore annually but now a lot of projects are underway across the country. The allocation for rolling stock for the railways has almost doubled from Rs 15,157.86 crore in RE 2022-23 to Rs 37,581 crore in 2023-24. With a whopping budget allocation of Rs 1.12 lakh crore for education, the Budget granted the highest allocation ever to the Education Ministry with certain new intakes on the platter like developing three centres of excellence for artificial intelligence (AI) in top educational institutions and 100 labs in engineering institutions for developing applications using 5G services.
Along with the increased expenditure on education for FY23-24, Sitharaman also proposed some key reforms and initiatives to boost the quality of education at all levels and support upskilling of youth. To improve regional air connectivity, the Budget proposed to revive 50 additional airports, heliports, water aerodromes and advance landing grounds in the next financial year. The announcement was made by Sitharaman while presenting the Union Budget for 2023-24. The announcement is part of a target to operationalise 1,000 UDAN routes during the currency of the scheme. T
The allocation for the Civil Aviation Ministry in the Union Budget has more than halved to Rs 3,113.36 crore for next financial year (including Rs 3,026.70 crore from revenue and Rs 86.66 crore from capital), especially due to a sharp reduction in the amount set aside for Air India Asset Holding Ltd. For 2022-23, the revised allocation is Rs 9,363.70 crore which is lower than Rs 10,667 crore estimated earlier. The sharp reduction is mainly on account of lower money set aside for AI Asset Holding Ltd (AIAHL), a special purpose vehicle formed by the government and that holds various assets of national carrier Air India.
