Budget 2023: Please-all budget that stays the course
The government has tightened its belt on the fiscal front with the fiscal deficit target for FY24 brought down to 5.9%, a 50 basis-point reduction from FY23.
Published: 02nd February 2023 07:42 AM | Last Updated: 02nd February 2023 07:45 AM | A+A A-
NEW DELHI: At first look, Budget 2023-24 may appear populist. But on closer examination, it turns out not to be the case. The smart packaging by Union finance minister Nirmala Sitharaman and her team at the North Block has made it look populist but remain firmly on the path of fiscal consolidation. The Rs45-lakh crore Budget has steered clear of too many freebies and unnecessary expenditures, and yet made an allocation here and there to please all sections.
The Budget turns out to be an exercise on expenditure and tax rationalisation. The government has tightened its belt on the fiscal front with the fiscal deficit target for FY24 brought down to 5.9%, a 50 basis-point reduction from FY23.
While the overall expenditure in FY24 has seen a 7.5% rise over the revised estimate for FY23, bulk of the increase is due to a sharp uptick in capital expenditure or capex spending for infrastructure and asset creation. The capex spending in 2023-24 has been increased by 33% to Rs10 lakh crore from Rs7.3 lakh crore (revised estimate) in FY23. Capital expenditure has almost trebled since 2019-20.
“This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds,” Sitharaman said in her Budget speech.
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Revenue expenditure administrative expenses used for paying salaries, pensions and subsidies — has seen only a modest 1.25% increase over the revised estimate for FY23. The fertiliser and food subsidy bill is budgeted at a lower level in FY24 than the revised estimate of FY23. Among other major cuts in allocation is for MNREGA, where the amount for the next financial year is kept at Rs60,000 crore, down from Rs90,000 crore (revised estimate) for FY23.
“A higher non-interest and non-subsidy revenue expenditure would provide the much-needed support to the economy recovery,” said India Ratings in a note. Income tax payers – especially the salaried class – have something to cheer, but all the benefits are reserved for the new tax regime, which was not gaining traction.
Notably, the upper limit for income tax rebate has been increased from Rs5 lakh to Rs7 lakh for those who opt for the new tax regime. Also, the surcharge on income above Rs5 crore has been reduced from 37% to 25%, bringing down the highest personal income tax rate from 42.7% to 39%. The basic exemption limit has also been raised from Rs2.5 lakh to Rs3 lakh.
While the government has extended some tax benefits, it has also tried plugging the loopholes used by tax evaders. One of the moves includes removing tax exemptions on withdrawal from all insurance schemes if annual premium is above Rs5 lakh crore.
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The Budget pegs the nominal GDP to grow at 10.5% to Rs302 lakh crore in FY24, slightly lower than what the Economic Survey report had estimated (11.1%). The government has pegged the gross tax revenue to grow at 9.5% to Rs 33.6 lakh crore over the revised FY23 estimate of Rs30 lakh crore. It means, the new financial year might not be able to drive revenue growth like FY23.
Encashment of earned leave up to 10 months of average salary, at the time of retirement in case of non-govt employee to increase from existing Rs 3 lakh to Rs 25 lakh
Income received from insurance policies, issued on or after April 1, 2023 (other than unit linked policies), having premium or aggregate of premium exceeding Rs5 lakh in a year, will be taxable (except in the case of death)
New common I-T return form for tax payers coming. Grievance redressal mechanism to be further strengthened
Micro enterprises with turnover up to Rs2 crore and certain professionals with turnover of up to Rs50 lakh can avail the benefit of presumptive taxation