Union Budget 2023 – Key Takeaways
Finance Minister Nirmala Sitharaman delivered the Union Budget 2023 on 1st February 2023, detailing the government’s vision and goals for the next fiscal year. Budget 2023 sought to revitalise the Indian economy, impacted by the unpredictable and turbulent global events, while also addressing long-standing economic challenges.
Nirmala Sitharaman detailed the Union Budget’s seven priorities for this year, calling it ‘saptarishi’ leading us through the Amrit Kaal. Inclusive development, youth power, infrastructure and investment, green growth, reaching the last mile, unleashing the potential, and the financial sector were the seven priorities of the budget.
The budget included several steps to boost growth and revive the economy. Let us quickly review the key takeaways from Budget 2023.
Benefits for the Indian Middle Class
The most significant announcement of the day concerned direct taxation. Under the new tax regime, individuals with annual incomes of up to Rs. 7 lakhs will have to pay no tax, an increase from the previous rebate under 87A of Rs. 5 lakhs.
Further, the minimum exemption limit is increased from Rs. 2.5 lakh to Rs. 3 lakhs under the new income tax regime.
In FY 2023-24, there will be five income tax slabs rather than six. The tax slabs are as follows:
| Income | Tax |
| Rs. 0 – 3,00,000 | Nil |
| Rs. 3,00,000 – 6,00,000 | 5% |
| Rs. 6,00,000 – 9,00,000 | 10% |
| Rs. 9,00,000 – 12,00,000 | 15% |
| Rs. 12,00,000 – 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
This is a great step as it will enable many middle-class and young people to increase their take-home earnings, allowing them to invest more and save for the future.
The annual standard deduction has also been hiked from Rs. 50,000 to Rs. 52,500 in the budget, offering a slight savings benefit.
Reduction in Highest Surcharge Rate
Another significant announcement was the reduction in the highest surcharge rate. Under the new tax regime, the highest surcharge rate payable under personal income tax has been slashed from 37% to 25%. As a result, the maximum tax rate on the highest income bracket, which is presently 42.744% (including all surcharges), will be reduced to 39%.
Big Boost to Digital India
The Finance Minister also proposed simplifying the Know Your Customer (KYC) process via a risk-based approach. PAN card will be a universal identifier, and a risk-based KYC requirement will be executed utilising the government’s digital locker infrastructure, which can store crucial documents such as PAN and Aadhaar.
Ultimately, this step will streamline the opening of bank accounts, and investing in insurance, mutual funds, or other financial instruments.
Raise in SCSS Investment Limit
Budget 2023 proposed a positive decision by increasing the deposit limit for senior citizens’ savings schemes (SCSS) from Rs. 15 lakhs currently to Rs. 30 lakhs, assisting elderly citizens in investing and earning more.
Huge Infrastructure Push
The capital expenditure is hiked by 33% to Rs. 10 lakh crores in a big infra boost, benefiting the capital goods and infrastructure sectors.
Clean Energy & Electric Vehicles
Budget 2023 allocates Rs. 35,000 crores for priority capital investment in energy transition and net zero goals, as well as energy security to fulfil India’s net-zero carbon emission target of 2070.
Big Blow for Insurance
Budget 2023 was a significant disappointment for insurance buyers and insurance companies. The Finance Minister proposed that the government will impose a tax on insurance policies issued on or after 1st April 2023, with premiums above Rs. 5 lakhs.
Until today, these insurance products were included in the tax-free investment basket. The new requirements, however, will not apply to unit-linked insurance plans (ULIPs). The tax exemption offered for the sum paid on the death of a person will not be impacted by the new plan.
Conclusion
The Union Budget 2023 gives a clear vision for the Indian economy, emphasising boosting development, generating employment, green initiatives, health and encouraging domestic manufacturing. If properly implemented, India is certainly poised for significant prosperity and stability, with advantages for all citizens.
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