Budget 2023 Key Highlights

Key Highlights of the Union Budget for 2023: The pharmaceutical industry has applauded Finance Minister Nirmala Sitharaman’s budgetary proposal to support research and innovation in the sector, but is upset that APIs, a crucial component of medicines, were not taken into consideration in the Budget 2023–24.

Live major highlights of the 2023 budget:

The Modi administration’s goals are the construction of roads, highways, and railway lines, as seen by the Budget for 2023–24’s continued emphasis on increasing Capex. With adjustments to the new income tax system, the middle class has received some respite, making it quite evident that the government intends to switch from the old system to the new one. With a target of 5.9% in FY 24 and adherence to the aim for the FY 25 fiscal deficit, the FM followed the fiscal deficit pathway in the Budget.

Overall, the objective of inclusive growth, macroeconomic stability, and sustainable growth outlined by the FM in 2019 is the foundation of the Union Budget 2023–24. One of the seven focuses in this budget is financial services. This year, guaranteeing broad financial inclusion, accessibility, better and quicker service delivery, as well as increased involvement in financial markets, are the main concerns.

Key Updates

A revised credit guarantee programme for MSMEs that will go into effect on 1 April 2023 and have a corpus of INR 9000 crore will allow for an additional INR 2 lakh crore in collateral-free lending and a 1% decrease in the cost of credit.

An effective credit flow and financial inclusion will be supported by the establishment of a national financial register. The Reserve Bank of India will be instrumental in developing the governing legislation for this crucial infrastructure.

Significant attention has been paid to streamlining and lowering the cost of compliance by encouraging public participation in order to conduct an extensive evaluation of previous consultations.

The push for improving business activities under GIFT would enable a single window registration process across several regulatory agencies and eliminate the need for duplicate compliance with IFSC and SEZ regulations.

For streamlined, risk-based KYC, banks will need to update and improve their models and systems. The ability to utilize the central infrastructure for retail and corporate customer information, such as identity and address, will be improved by the budget.

Tax Amendments 

1. Benefits or perquisites offered in kind or cash, in whole or in part, would be subject to taxation as business income. The legal precedents that excluded advantages from falling under the definition of “Profits and earnings from business and profession” have been overturned.
2. It has been suggested that payments made to micro and small businesses only be eligible for a deduction based on real payments.
3. This will encourage timely payment reception and increase MSMES’s access to liquidity.
4. It is recommended that consideration received by an Indian firm upon issuing shares to a non-resident, in excess of the fair market value of the shares, be considered as income from other sources in the hands of the Indian company.
5. By submitting a rectification application, one may claim the credit of taxes withheld in coming years against the income already provided to tax in the prior year.
6. To lessen the burden on the commissioner of income tax (appeals), it is proposed to establish a different first appellate authority at the level of the joint commissioner of income-tax (appeals)/additional commissioner of income-tax (appeals), with the same powers, responsibilities, and accountability as the commissioner of income-tax (appeals) (appeals).
7. To efficiently complete the tax scrutiny proceedings, the time frame for the proceedings has been extended from 9 months after the end of the assessment year to 12 months following the end of the assessment year.
8. For capital assets that are intangible assets or any other right for which no consideration has been paid for acquisition, the “cost of any improvement” and the “cost of acquisition” shall be treated as “NIL”.
9. It is suggested to move the sunset date of incorporation for new qualifying start-ups to enjoy tax holidays forward by one year, from 1 April 2023 to 1 April 2024. This will support the development of our nation’s startup ecosystem.
10. To reduce the burden of compliance for small and medium firms using the presumptive taxation scheme, the bar for choosing a presumptive taxation scheme has been raised from INR 50 lakhs to INR 75 lakhs for small professionals and from INR 2 crore to INR 3 crore for small businesses.

Final Words

The government has promoted financial inclusion and the digitization of money across industries, as seen in the Union Budget 2023. The FM increased financial assistance to enterprises, digitalized the agricultural sector, loosened numerous corporate restrictions to draw FDI, and increased capital investment to stimulate business growth in this Union Budget. In conclusion, the budget is both aspirational and realistic, with a strategy for achieving sustained growth and turning India into an economic giant.