Highlights of Union Budget 2023-24

Union Budget is an annual event, and taxpayers of the country has a host of expectations. Union Budget 2022-23 was focused on tackling capital expenditure more than individual sweet pies. Major changes were announced for income tax slabs under the new tax regime, indirect taxes, government saving schemes, among other various areas.

Union Budget 2023-24 is focused on ‘inclusive growth’ across seven priority areas. The Finance Minister Nirmala Sitharaman has named these the ‘Saptarishi’.

Inclusive Development
Reaching the Last Mile
Infrastructure and Investment
Unleashing the Potential
Green Growth
Youth Power
Financial Sector

Let us delve deeper to know the major highlights of Budget 2023.

Income Tax Payers

The new tax regime has been made the default regime, although citizens can still opt for the old tax regime.
No tax will be levied on income up to Rs 7.5 lakh a year under the new tax regime.
People with taxable income up to Rs 15 lakhs will pay only up to 10% (effective tax rate) of tax as per new income tax slab.
Standard deduction is increased to Rs 52,500 under new tax regime.
The highest surcharge rate is reduced to 25% from 37%. However, it is applicable for assessee who opt for the new tax regime.
Exemption on leave encashment is increased to Rs 25 lakhs.
Tax exemption is removed in insurance policies that has a premium over Rs 5 lakh. Exemption is not available on annual premium exceeding Rs. 5 lakh for the policies issued on or after 1 April 2023.
TDS rate will be reduced from 30% to 20% on taxable portion of EPF withdrawal in case of non-availability of PAN.
Next-Generation Common Income Tax Return (ITR) Form will be rolled out.
For co-operative societies, a higher limit of Rs. 3 Crore for TDS on cash withdrawal will be provided.

Government Saving Schemes

The maximum deposit amount for Senior Citizen Savings Scheme (SCSS) will be increased to Rs. 30 Lakhs from the current threshold of Rs. 15 Lakhs.
The maximum deposit amount limit for Post Office Monthly Income Scheme (POMIS) has been increased enhanced from Rs. 4.5 Lakhs to Rs. 9 Lakhs for single account holders, and from Rs. 9 Lakhs to Rs. 15 Lakhs for joint account holders.
New saving scheme for women 'Mahila Samman Saving Certificate' will be available for 2 years till March 2025.
Revamped Credit Guarantee Scheme for MSMEs with higher corpus and lower cost of credit.

Other Changes Announced in Union Budget 2023-24

The new Union Budget has focused on inclusive growth by providing space and regulatory measures for SMEs and professionals. These small organizations form the backbone of any economy. Other announcements made in this direction include:
Concessional tax rate of 15% for cooperative societies indulging in the manufacturing business.
Exemption to housing development authorities.
Incentives to IFSC if the relocation is before 31 March 2025.
Conversion of physical Gold into electronic gold receipt and vice versa will not lead to capital gains.
The maximum limit for capital gain exemption available under Section 54/54F has been increased from Rs. 2 Crore to Rs. 10 Crore.
Enhanced limits for MSMEs and professionals with a turnover of Rs 3 crore and Rs 75 lakhs respectively, for the benefit of presumptive taxation.
Payments made to MSMEs will be allowed as a deduction only after the payment has been made to them.
The date of incorporation for startup tax benefits was extended for another financial year from 31 March 2023 to 31 March 2024.

What has Remained Unchanged in Union Budget 2023?

Against popular expectations the following primary direct tax heads have been left unchanged by Union Budget 2023:

Deductions from gross total income
Taxation of short-term capital gains

Choose your Income Tax Slab Carefully

After the Union Budget 2019-20, as an individual taxpayer, you had two income tax slab options. While the old tax regime continues to serve with deductions from gross total income and standard deduction, the new tax regime allows you more freedom.

Thus, you have to figure out the minimum tax liability regime for your income and taxpayer status.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

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Highlights of Union Budget 2023-24