Budget 2023 Live Updates: Substantial changes made in personal income tax in Budget, new tax regime now more attractive, says FM

Investors will keenly watch the announcements mande by finance minister Nirmala SItharaman. Infrastructure spending, measures to aid long-term growth, the government's fiscal consolidation path and the borrowing calendar for fiscal 2024 are seen as key triggers for the market.

The benchmark BSE sensex started on a positive note, rising over 400 points; NSE Nifty is up 106 points at 17,768

Ahead of the presentation of Union Budget 2023-24 in the Parliament on Wednesday, Minister of state (MoS) for finance Pankaj Chaudhary said that the budget will incorporate the expectations of every section of society and will stand on everyone's expectations. Speaking to ANI ahead of the Budget, MoS Finance said that the people's expectations would be reflected in the Budget which will be presented later today.

• Finance Minister Nirmala Sitharaman is expected to further give impetus to employment generation and job creation in the economy.
• The Economic Survey showed net addition to EPFO payroll is steadily moving upward, with the majority share coming from the youth.
• Employment in nine major sectors has increased by 10 lakh over the year 2021-22 as per the QES.
• Employment in the organised manufacturing sector has also been rising over the years, as per the ASI 2019-20 data.
• The steady increase in employment levels can be attributed to multiple measures taken to cushion the impact of Covid-19 on MSMEs, 158 Economic Survey 2022-23 street vendors, and manufacturing units and provide job opportunities through various targeted schemes and measures as detailed in later in the chapter, Economic Survey noted.

Nirmala Sitharaman has reached ministry of finance ahead of Budget presentation. She is expected to meet President Draupadi Murumu shortly.

Prime Minister Narendra Modi’s final full-year spending plan before 2024 polls comes amid rising interest rates and slowing global growth, which could make him desist from outright populism. Finance Minister Nirmala Sitharaman may tweak income-tax slabs and increase spend on the poor through programs such as rural jobs.

• Both the road and railway ministries may see 20-30% increase in their allocation by FM Nirmala Sitharaman considering their track record in spending so far.
• During the current financial year, the Centre has allocated almost Rs 2 lakh crore for the road transport and highways ministry.
• In the case of railways, the government had allocated Rs 1.4 lakh crore for 2022-23.

Ahead of Budget 2023, the Goods and Services Tax (GST) collection in January surged to over Rs 1.55 lakh crore, the second highest-ever mop-up, the finance ministry said on Tuesday. "The gross GST revenue collected in the month of January 2023 till 5:00 PM on 31.01.2023 is Rs 1,55,922 crore of which CGST is Rs 28,963 crore, SGST is Rs 36,730 crore, IGST is Rs 79,599 crore (including Rs 37,118 crore collected on import of goods) and cess is Rs 10,630 crore (including Rs 768 crore collected on import of goods)," the ministry said in a statement.

• Improved fiscal transparency and realistic revenue assumptions in the Budget: The Union Government has accorded the highest priority to improving transparency in its financial statements and accounts by bringing below-the-line expenditures above the line.
• Discontinuation of Plan-Non plan classification: The Budget FY18 discontinued having Plan and Non-Plan classifications of Government expenditure.
• Merger of railway Budget with the Main Budget: The railway budget was merged with the Union Budget from FY18. The reform gave a holistic picture of the government's financial position.
• Shifting the date of the Budget to 1 February: The advancement of Budget presentation by a month has paved the way for early completion of the Budget cycle.
• The above four have been highlighted by the Economic Survey 2023.

1. India's growth prospects will be keenly watched in a year when major advanced global economies are fighting to avert slipping into recession.
2. According to a survey conducted by TOI and Deloitte India, the biggest economic uncertainty that faces businesses today is the global slowdown.
3. The Economic Survey 2023 released on Tuesday pegged economic growth for 2023-24 at 6%-6.8%.

"For the benefit of homebuyers, the input credit regime should be reinstated in the GST regime for the residential real estate atleast. This will help in making homebuying an affordable and buyer-friendly process. It will protect buyers and developers from the ramifications of the capricious cost of raw materials. The government should facilitate a Single Window Clearance to enable faster deliveries and project completions," says Amit Modi, President, CREDAI, Western UP.

Finance Minister Nirmala Sitharaman is expected to announce measures that will give impetus to private sector investment in the economy which is crucial for sustained job creation. According to the Economic Survey, a fundamental principle behind the government’s policy in the post-2014 period has been the engagement with the private sector as a partner in the development process. Significant initiatives have been introduced under Aatmanirbhar Bharat and Make in India programmes to enhance India’s manufacturing capabilities and exports across the industries.

"A formal mechanism of sharing information through the Annual Information Statement (AIS) and e-Verification scheme has recently been enabled. These measures further the aim of widening and deepening the tax base by ensuring authorities possess all relevant financial information of an assessee, thus allowing access to such information to a taxpayer for accurate filing of his return of income," the Economic Survey notes

The TOI-Deloitte Survey showed that SISFS is considered to be a key initiative by the Centre that helped India become the 3rd largest start-up ecosystem in the world, after the US and China. Majority of the respondents want the Centre to prioritise issues related to GST credit.

ICRA expects the government will continue with its thrust on green mobility, infrastructural projects, and job creation in the upcoming budget, which would consequently support the automotive sector. In the past few years, the government has put out a number of schemes, such as the FAME II scheme and production-linked incentive schemes, to help the local manufacturing ecosystem grow. The government is likely to make more announcements in this area, such as better financing terms for electric vehicles, as it continues to work toward its “Make in India’ goals.

"We hope that the government will continue supporting the EV adoption program while encouraging the adoption of next-gen technology such as Artificial Intelligence, Data Analytics, Industry 4.0, Cloud Computing and Robotics, which will enable the Manufacturing enterprises of tomorrow. We also hope the budget outlays investments in Aerospace and Defence that attract global manufacturers to set up manufacturing in India," says Warren Harris, Managing Director and CEO, Tata Technologies.

To give a boost to “Aatmnirbhar Bharat” efforts, the Modi government is considering increasing customs duties on about 35 items in the Union Budget 2023. The government's likely move is intended to curb imports and encourage local manufacturing of some of these products. The commerce and industry ministry had previously asked various ministries to provide a list of non-essential items whose imports should be discouraged through a tariff hike.

According to a pre-Budget survey conducted jointly by Times of India and Deloitte India, rationalization of income-tax rates, simplified tax compliances and effective tax administration tops the list of expectations from Finance Minister Nirmala Sitharaman.

"The upcoming budget will undoubtedly be geared towards augmenting the growth of the Indian economy, but it also needs to address the challenges faced by the common man and the salaried class as we recover from a global pandemic and tackle the ongoing global economic slowdown. People are especially pinning their hopes on the upcoming budget to address the issue of unemployment, control inflation, and make essential goods and services more affordable. The salaried class is looking for some cheer on the personal tax front, hoping that the annual basic exemption limit gets enhanced to Rs 5 lakhs from the existing Rs 2.5 lakhs," says Bipin Preet Singh, Co-Founder & CEO of MobiKwik.

Finance Minister Nirmala Sitharaman will present Budget 2023 with the assurance that the worst of CPI inflation seems to be behind us. "RBI has projected headline inflation at 6.8 per cent in FY23, which is outside its target range. At the same time, it is not high enough to deter private consumption and also not so low as to weaken the inducement to invest. Moderately high inflation has further ensured the anchoring of inflationary expectations preventing prices from weakening demand and growth in India," notes the Economic Survey.

India’s aspiration is to be net zero by 2070 and have 500 GW of non-fossil energy (50% from renewable energy) to reduce one billion tonnes in cumulative emissions by 2030. Hydrogen may account for 12% of global energy use by 2050. "India needs to stimulate the entire eco-system of GH2 i.e., investment, production, storage, and transport and export," says Sagar Shah, Tax Partner at EY India.

Finance Minister Nirmala Sitharaman should look to simplify the capital gains tax regime in Budget 2023. Most participants in a TOI-Deloitte Survey said that the current capital gains tax regime is very complex with multiple tax rates and holding rates applicable to various asset classes.

Infrastructure investments help improve manufacturing competitiveness and also have a multiplier effect, boosting investments, job creation, and growth across sectors, from steel and cement to auto and real estate. This budget, the allocation for all the ministries involved in infrastructure creation is expected to be similar to the last one or slightly higher (in absolute terms).

"As far as the fiscal deficit is concerned, we are off the glide path. This year the government will honestly have to address this question. A new glide path looking at the monetary and fiscal policy, inflation and growth, may be required. That requires some medium term focus in the Budget and not just focus for this year," Dr Sanjaya Baru, Distinguished Fellow, Centre for Air Power Studies told TOI.

Finance Minister Nirmala Sitharaman in her Budget speech is expected to announce the roll out of over 400-500 Vande Bharat Express trains. Indian Railways is looking to replace its Shatabdi and Rajdhani Express trains with the semi-high speed Vande Bharat trains.

Budget 2023 will be crucial for the automotive industry. Most auto segments continue to clock volumes far below those seen in 2019. So the right impetus at this juncture will thus be key to accelerate the pace of revival.

FM Nirmala Sitharaman's Budget will be presented in the backdrop of the major advanced world economies being crippled by a downturn. However, as the Economic Survey points out, "Agencies worldwide continue to project India as the fastest-growing major economy at 6.5-7.0 per cent in FY23. These optimistic growth forecasts stem in part from the resilience of the Indian economy seen in the rebound of private consumption seamlessly replacing the export stimuli as the leading driver of growth. The uptick in private consumption has also given a boost to production activity resulting in an increase in capacity utilisation across sectors."

Renowned author Gurcharan Das is of the view that the Indian economy will continue to grow well in the coming years as well. He expects that India is headed in the direction of becoming a middle-class economy with an average per capita income of $10,000. In an interview with TOI, he said that Finance Minister Nirmala Sitharaman should focus on fiscal consolidation and keep her eye on the fiscal deficit target.

"IMF estimates India to be one of the top two fast-growing significant economies in 2022. Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy," says the Economic Survey.

Surabhi Marwah, Tax Partner at EY India explains why there is a case for triggering the 30% income tax slab at an income level much higher than the present Rs 10 lakh. She talks about how the concessional income tax regime can be made more popular amongst individual taxpayers.

Finance Minister Nirmala Sitharaman is expected to further streamline the implementation of the Production LInked Incentive (PLI) scheme in her Budget speech. As of now, PLI scheme exists for 14 sectors and this number could easily go up after today's Union Budget announcements.

RBI had launched a pilot of retail CBDC with a closed group of merchants and users in December 2022. It is expected that the union budget will provide insights on the pilots and come up with more use cases on digital rupee. One important area to look forward to is the introduction of programmability of digital rupee for direct benefit transfers and priority sector credit disbursement where the currency is used for intended purpose.

"Given Government’s focus towards clean energy, some measures can be expected to facilitate further electric vehicle (EV) adoption and to support development of EV ecosystem in the country. Apart from this, initiatives to support rural income would also indirectly benefit some segments within the auto industry (mainly entry level two wheeler segment and the tractor segment)," says Arun Agarwal, Vice President, Kotak Securities Ltd.

Individuals be it men or women are subject to the same income tax slab rates. The differential tax slabs are applicable only with respect to the age of the individuals and not with respect to gender. Experts are of the opinion that to promote the future of working women, it is important to give them additional tax benefits.

Ahead of Union Budget 2023, the 30-share BSE benchmark Sensex settled with a gain of 49.49 points or 0.08 per cent at 59,549.90 on Tuesday. During the day, the benchmark hit a high of 59,787.63 and a low of 59,104.59.

Finance minister Nirmala Sitharaman is being looked at to revise income tax slabs and rates in the Union Budget 2023. The expectation is also high that the new income tax regime may be tinkered with, especially with regards to a hike in the basic tax exemption limit.

As the global agritech market inches closer to achieve a CAGR of 12% by 2027, India is certainly going to be a major contributor to this growth. With the upcoming budget announcement inching closer, the agritech industry is hopeful that the government will extend its support through newer policies.

Almost 85% of respondents in the pre-Budget TOI-Deloitte survey said that the top tax priority for the common man should be reduction in the income tax burden. Some of the other top income tax expectations of the common man include a hike in the Section 80C limit from Rs 1.5 lakh and an increase in the standard deduction from Rs 50,000 to Rs 1 lakh.

"The Indian economy appears to have moved on after its encounter with the pandemic, staging a full recovery in FY22 ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY23," notes the Economic Survey 2023.

FM Nirmala Sitharaman is expected to announce that the fiscal deficit target for the 2022-23 will be met at 6.4%. Experts say that she may even better the fiscal deficit target numbers on the back of robust tax collections.

Prime Minister Narendra Modi has said that the Union Budget will aim to fulfill the aspirations of the common man

Economic Survey 2023 has said that the Indian economy has recovered from the shock of the pandemic. However, given the current global recessionary pressures, FM Sitharaman's Budget speech will be crucial in steering the Indian economy on a stable GDP growth path.

Finance minister Nirmala Sitharaman will present her fifth straight Union Budget today, that is, February 1, 2023 at 11.00am in Parliament.