CA G.Karthikeyan writes about the Government efforts that have a long term vision and states that the FM has presented a forward looking inclusive budget. Start-ups have received a boost and especially so in agriculture.
Coimbatore: The 2023-24 budget represents the last full budget of the current government and is presented in the midst of a plethora of challenges: The global economy especially the European Union & USA are displaying visible signs of slowdown.
The EU is primarily affected by the Ukraine crisis and inflation in a post Covid environment. USA too shows visible signs of slow down with big companies taking to laying off employees in droves. Global inflationary trends pose a challenge to Indian exports as well. India has a CAD of USD 35 Billion and a trade deficit of USD 83.5 Billion – the highest ever. Under these circumstances, domestic consumption growth becomes paramount.
Government efforts have a long term vision and in this context the FM has presented a forward looking inclusive budget. Start-ups have received a boost and especially so in agriculture. Innovation is the need of the hour and is incentivized by the government. The extension of the tax holiday to March 2024 is also a welcome move. Entry level taxpayers have received a bonanza via the increase in exemption limit to Rs.7.00 lakhs under the new regime. Top level taxpayers have also received a reduction in terms of surcharge from 37% on tax to 25% on tax and thus the net effect of taxation is reduced from 42.7% to 39%. The upper middle class however did not receive any tax cuts.
Collateral free loans to MSMEs have been enabled and this would help fund MSMEs without adding a collateral burden. Though there has been no direct push for employment, it is hoped that the various infrastructure projects will create the necessary push for employment. A reduction in the PLI threshold limit would have led to inclusion of MSMEs in that scheme and added to employment generation.
The Indian economy is the one bright spot in an otherwise drab world outlook. The IMF admitted as much is its World Economic Outlook report. With a growing job market amidst global recessionary trends, India is the cynosure of all eyes. As result we have comparatively lesser challenges to worry about. However inflation is a worry though it is back in the RBI mandated range. By & large the populace will continue to deal with inflationary pressures. Despite this, overall this budget may serve as a country wide clarion call to undertake activities that boost growth and prosperity at the micro and the macro level.
Salient features of the budget:
1. Macro-economic Proposals:
a. PAN will be used as a common identifier for all digital systems of specified Govt. agencies
b. Rs 9,000 crore for revamped Credit Guarantee Scheme.
c. Entity Digilocker is to be setup for use by SMEs, Large businesses and Charitable trusts for storing and sharing documents online.
d. Mahila Samman Saving Certificate - a one-time new small saving scheme is proposed to be introduced to be launched for 2 years period upto March 2025. Deposit facility upto Rs. 2 lakh in the name of women/ girls for 2 years tenure. Fixed rate of interest of 7.50% with partial withdrawal option.
e. Outlay for PM Awas Yojana is being enhanced by 66% to over Rs. 79,000 crore.
f. 30 Skill India International Centres to be set up across different States to skill youth for international opportunities
g. ₹20 lakh crore agricultural credit targeted at animal husbandry, dairy and fisheries
h. Agriculture Accelerator Fund to be set-up to encourage agri-startups by young entrepreneurs in rural areas.
2. Income Tax:
a. Personal Income Tax
i. New Tax regime will be the default tax regime, although the taxpayer may also file under the Old tax regime.
ii. Tax Rates under the new tax regime will be as follows:
Rs 0-3 lakh: Nil
Rs 3-6 lakhs: 5%
Rs 6-9 lakhs: 10%
Rs 9-12 lakhs: 15%
Rs 12-15 lakhs: 20%
iii. Rebate under Section 87A has been increased. There will be no tax liability up to a total income of Rs. 7 Lakhs.
iv. Tax exemption on leave encashment on retirement of non-government salaried employees hiked to Rs 25 lakh from Rs 3 lakh.
v. A standard deduction of Rs. 50,000 is proposed to be introduced under the new tax regime.
vi. Sec 44ADA (Presumptive Taxation) limits are enhanced to Rs. 75 lakhs from Rs. 50 Lakhs provided cash receipts is not more than 5%.
vii. The upper limit for exemption under Section 54 and Section 54F is proposed to be capped at Rs. 10 Crores.
viii. Highest surcharge rate is reduced from 37% to 25% under the new tax regime.
b. Startups:
i. Date of incorporation for startups for claiming tax benefits is proposed to be extended to 31/03/2024 from existing 31/03/2023.
ii. Benefit of carry forward of losses on change of shareholding is being extended from 7 years of incorporation to 10 years.
c. Others:
i. Sec 44AD (Presumptive Taxation) limits are enhanced to Rs. 3 Crores provided cash receipts is not more than 5%.
ii. New co-operatives which commence manufacturing activities till 31 March 2024- reduced tax rate of 15%.
iii. A common IT return form is proposed to be rolled out for taxpayer convenience.
iv. TDS rate to be reduced from 30 per cent to 20 per cent on taxable portion of EPF
withdrawal in non-PAN cases.
v. Grievance Redressal Mechanism is proposed to be strengthened.
vi. Period of tax benefits to funds relocating to IFSC, GIFT City extended till 31.03.2025
vii. A higher limit of Rs. 3 crore for TDS on cash withdrawal to be provided to co- operative societies.
viii. Deduction for expenditure incurred on payments made to MSMEs to be allowed only when payment is actually made in order to support MSMEs in timely receipt of payments.
3. Indirect Taxes:
a. Basic Customs Duty on goods other than Textiles and Agriculture from 21% to 13%
b. To promote Electronics manufacture- relief on customs duty for camera lens and lithium battery
c. To improve the manufacture of mobile, relief from customs duty on import of parts and inputs provided
d. National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by about 16 per cent.
e. Basic customs duty rate on compounded rubber increased to 25 per cent from 10 per cent or 30 per kg whichever is lower.
f. Import duty on silver dore, bars and articles increased.
g. Customs Duty on specified capital goods/machinery for manufacture of lithium-ion cell for use in battery of electrically operated vehicle (EVs) extended to 31.03.2024.