The 2023 Finance Budget of India has been a highly anticipated event, with experts and analysts closely scrutinising the details to determine the impact it will have on the country’s economy. The Union Budget 2023–2024 was presented by the Finance Minister, Nirmala Sitharaman, on February 1st, 2023. This is her fifth consecutive budget and the last budget before the elections next year. The budget has provisions aimed at benefiting different sections of society and is aimed at promoting personal consumption through higher tax savings.
One of the major highlights of the budget was the emphasis on boosting the agriculture sector. A total of Rs. 1.41 lakh crore was allocated for the sector, with the aim of increasing the income of farmers and making the sector more sustainable. The government also announced the launch of a new scheme, the Kisan Rail, which will help in transporting perishable goods across the country and reduce post-harvest losses.
Another important aspect of the budget was the allocation of Rs. 3.05 lakh crore for the education sector. The government plans to upgrade the infrastructure of schools and colleges as well as increase the number of seats in higher education institutions. This will not only improve the quality of education but also increase the employability of the youth.
The health sector also received a considerable allocation of Rs. 2.23 lakh crore. The government aims to upgrade the existing health infrastructure and increase the availability of healthcare facilities in rural areas. The budget also announced the launch of a new health scheme, the PM Atmanirbhar Swasth Bharat Yojana, which will provide free vaccines to all citizens and improve the country’s health system.
The finance minister also announced a number of measures aimed at boosting the economy and creating new job opportunities. A total of Rs. 1.97 lakh crore was allocated for the MSME sector, with the aim of providing easy access to credit and improving the ease of doing business. The government also announced the launch of a new scheme, the Pragati Scheme, which will provide credit and support to women entrepreneurs.
The budget also had several measures aimed at improving the financial sector. A total of Rs. 5,000 crore was allocated for the development of fintech and digital infrastructure, with the aim of making financial services more accessible to the masses. The government also announced the launch of a new scheme, the Samadhan Scheme, which will provide support to small businesses and help them overcome their financial challenges.
Here are some of the major highlights related to personal finance from the budget.
Personal Income Tax Exemptions:
Under the new income tax regime, several announcements have been made on personal income tax. The income tax rebate limit under the new tax regime has been increased to INR 7 lakh from INR 5 lakh, meaning that individuals with an income up to INR 7 lakh will not have to pay any tax.
The lowest exemption limit under the slab has also been increased to INR 3 lakh from INR 2.5 lakh. The tax slab under the new regime is as follows:
- Nil up to INR 3 lakh;
- 3 to 6 lakh rupees (5%);
- INR 6 lakh to INR 9 lakh – 10%;
- INR 9 lakh to INR 12 lakh – 15%;
- INR 12 lakh to INR 15 lakh – 20%;
- More than INR 15 lakh—30%
The surcharge rate in the new tax regime has been reduced from 37% to 25%.
New Savings Scheme for Women:
The budget has proposed a new savings scheme for women or girls, called the Mahila Samman Savings Certificate (MSSC), which will offer a fixed interest rate of 7.5% per annum on deposits up to INR 2 lakh for a tenor of up to two years with the benefit of a partial withdrawal option.
Savings Schemes for Senior Citizens:
The maximum deposit limit for the Senior Citizen Savings Scheme (SCSS) has been increased from INR 15 lakh to INR 30 lakh, with an interest rate of 8% per annum. The maximum deposit limit for the Post Office Monthly Income Scheme Account (MIS) has been increased to INR 9 lakh for single accounts and INR 15 lakh for joint accounts, with an interest rate of 7.10% per annum. The tax exemption limit on leave encashment on the retirement of salaried employees working in private establishments has also been increased to INR 25 lakh from INR 3 lakh.
Credit to MSMEs:
The budget has announced a capital infusion of INR 9,000 crore under the credit guarantee scheme for MSMEs starting from April 1, 2023. This will enable additional collateral-free guaranteed credit of INR 2 lakh crore and reduce the cost of credit by about 1%. The government has also proposed returning 95% of the forfeited amount related to bid or performance security to MSMEs.
Simplifying Access to Financial Services:
The budget has proposed setting up a national financial information registry to improve the flow of credit, promote financial inclusion, and foster financial stability. The government has also proposed creating a one-stop digital platform for small businesses to access credit.
The Union Budget for 2023–2024 has several announcements for individuals and businesses. The proposed changes in the new income tax regime and the new savings schemes for women and senior citizens are said to boost personal consumption and savings. The capital infusion for MSMEs and the proposed measures to simplify access to financial services will also benefit the economy.
Another highlight of the budget was the proposed reduction in tax deduction at source (TDS) from 30% to 20% on the taxable portion of EPF withdrawals in non-PAN cases. This move is expected to reduce the burden of TDS on taxpayers and provide them with more disposable income. It has also been proposed that the conversion of gold into an electronic gold receipt and vice versa not be treated as a capital gain.
The Union Budget 2023–2024 also focused on improving access to financial services for all citizens, particularly in rural areas. The Finance Minister proposed the setting up of a national financial information registry to facilitate the flow of credit, promote financial inclusion, and foster financial stability. The government also plans to establish common service centres in every rural block to provide access to financial services to people living in remote areas.
In addition to the personal finance highlights, the budget also had several announcements to support the MSME sector. The government announced a capital infusion of INR 9,000 crore under the credit guarantee scheme for MSMEs, starting April 1, 2023. The move is expected to enable additional collateral-free guaranteed credit of INR 2 lakh crore and reduce the cost of credit by about 1%. The government also proposed to return 95% of the forfeited amount relating to bid or performance security to MSMEs.
The budget had something positive for every section of society, including farmers, who will benefit from the government’s proposal to provide an agri-infrastructure corpus of INR 1,000 crore and an agriculture credit target of INR 16.5 lakh crore for the financial year 2023–24. The government also plans to launch a new initiative, “One Nation, One Market,” to provide a unified market for agricultural products and remove interstate trade barriers.
The proposals on personal finance are said to provide relief to taxpayers and boost consumption, while the support to MSMEs and the agriculture sector will boost economic growth and job creation.
The 2023 Finance Budget is said to seek to improve the lives of citizens and boost the country’s economy. The allocation of funds for different sectors and the launch of new schemes show the government’s commitment to building a self-reliant India and improving the standard of living of its citizens. While the budget has its challenges, it is to be seen whether it will set the tone for a bright future for India. The experts have been giving mixed reviews so far. As I am not a financial professional, I have only given here a summary of the analysis put up by various experts in this matter.
The information presented in the article is based on the 2023 Finance Budget of India presented by the Finance Minister, Nirmala Sitharaman, on February 1st, 2023. The budget details can be verified by visiting the official website of the Ministry of Finance, Government of India.