By Amit - February 2, 2023
27 minutes ago
Union Finance Minister Nirmala Sitharaman presented the budget for 2023-24 on Wednesday. This fifth budget of the Modi 2.0 government was presented at a time when assembly elections are to be held in 9 states this year and next year the Modi government itself will go to the people’s court to seek votes.
In his budget speech, the Finance Minister said that the Indian economy is on the right track and is moving towards a bright future. As a big boost to the economy and taxpayers, Sitharaman has made major changes in the tax slabs of the new tax system. Along with this, allocation has also been increased under the head of Railways and Capital Expenditure. However, the budget left a lot to be desired for the education sector.
Come, let us understand the main points and their take-aways for this budget…
1. Taxpayers… trying to give something to everyone in the new system
The Finance Minister has made changes in the slabs under the new tax system. Two changes are most important. First- Basic exemption limit has been increased from 2.5 lakh to 3 lakh. Second- The income limit for the rebate available under section 87A has been increased from 5 lakh to 7 lakh.
In simple language, on choosing the new tax system, income up to 7 lakhs will be tax free. The tax slab has also been changed for those earning more than this.
Along with this, in the new tax system, there will be a standard deduction of Rs 50,000 for those earning an annual salary of up to Rs 15 lakh and a deduction of up to Rs 15,000 from family pension.
Due to the simple process and easy compliance, it can be said that a lot has been given in the budget for the middle class tax payers. More attractive facilities than before have been given to those adopting the new tax system.
The highest surcharge rate which was till now 37% has been reduced to 25% in the new tax system. The exemption limit for capital gains tax on residential house has now been raised to Rs 10 crore.
Takeaway: There’s Something for Every Taxpayer…But Capital Income Discrepancy Remains
An attempt has been made to give something or the other to every taxpayer in the budget. The middle class can get relief by increasing the exemption limit in the new tax system. While the standard deduction of 50 thousand will give more cash in the hands of the people.
However, anomalies in tax treatment of capital income i.e. income from bonds, equity or mutual funds etc. have still not been resolved. These could have been taken care of in the budget.
2. Special focus on agriculture-farmers… not only fisheries, dairy but also agro start-ups
In this budget, the central government has made several announcements related to supply in the agriculture value chain. Efforts have been made to increase productivity in agriculture through measures like better agricultural credit, clean plant program and investment in digital infrastructure.
The target of agricultural loans has been increased from 18 trillion to 20 trillion now. In this, special attention has been given to sectors like animal husbandry and fisheries. Government is giving 2% interest subsidy. This means that farmers will be able to get short term agriculture loans up to 3 lakhs at an effective annual interest rate of 7%.
An Agriculture Accelerator Fund will also be launched to promote agro start-ups. This fund will be useful in increasing the use of technology in increasing agricultural production.
Along with this, the government will also promote alternative crops. 1 crore farmers will be encouraged to adopt natural farming. The use of alternatives to fertilizers will be promoted in the states through the PM PRANAM scheme.
The government will focus on millet i.e. coarse grain cultivation, domestic sale and export. Along with this, fisheries and natural farming will also be promoted. This will help in crop diversification. A new scheme named Pradhan Mantri Matsya Sampada Yojana will be launched which will work for fishermen, fish sellers and micro enterprises.
Along with this, digital public infrastructure is also being created for farming. Its aim will be to prepare digital solutions with special focus on the problems of the farmers.
In this, from better farming inputs (machinery, seeds) to better understanding of the market will be created so that the agriculture industry and start-ups can get a support. By connecting the farmers with the markets, they will also be able to get a better price for their crops. Steps will also be taken to decentralize the storage of agricultural products so that wastage is reduced and the shelf life of agricultural products is increased.
Take Away: Trying to connect farming with technology…will bring youth into the agriculture industry through start-ups
In the budget, apart from providing better facilities to the farmers, the government has also tried to make the agriculture industry more attractive for the youth.
On the one hand, farmers doing natural farming and producing millets will get incentives. On the other hand, by increasing the limit of agricultural loans and promoting start-ups, the government is also increasing the focus on agricultural management and storage. Sectors related to agriculture like fisheries and dairy industry will also get a boost.
3. Education… Preparation for a radical change in the training of teachers
The budget of the Ministry of Education for 2023-24 has been made 1.12 lakh crores. It was 1.04 lakh crore in 2022-23.
The aim of the government is to bring radical changes in teachers’ training. For this, innovative methods, curriculum transactions, professional development, surveys as well as new communication and information technologies will be implemented.
To give a boost to medical education, 157 new nursing colleges will be established. Along with this, new programs will also be started for the training of medical equipment.
In the next 3 years, the central government will appoint 38800 teachers and support staff in 740 Eklavya model schools focusing on the education of 3.5 lakh tribal students of the country.
Apart from this, 3 Centers of Excellence for Artificial Intelligence will also be established. These centers will promote inter-disciplinary research to find the right solutions to problems in sectors such as agriculture, health and sustainable development.
Take Away: The budget for education increased by only 8%…the budget for Sarva Shiksha Abhiyan did not increase
The budget of the Ministry of Education has been increased by only 8%. Not only this, the budget of Sarva Shiksha Abhiyan, the biggest scheme related to school education, is almost the same. In 2022-23, Rs 37383 crore was given under this scheme. Rs 37453 crore has been given for the scheme in 2023-24.
This budget seems really meager when both teachers and students across the country are trying to recover from the losses caused during the pandemic.
4. Start-ups… income tax benefits will now be available for one more year
The government has tried to make business a little easier for start-ups in the budget. Under this, the limit of income tax incentives available to start-ups has now been extended by one year.
That is, start-ups under 801AC will get incentives on income tax till March 31, 2024 instead of March 31, 2023.
Also, there will now be 100 Joint Commissioners to handle small appeals related to Income Tax. Not only this, start-ups will be able to carry forward their benefits for 10 years instead of 7.
Takeaway: Focus on start-ups has been beneficial for India…they will be encouraged further
The government has taken several steps for startups in this budget. Even before this, start-ups have benefited from the decisions of the government.
The result of these is that today India is the third largest start-up ecosystem in the world. It also ranks second in start-up innovation quality among middle-income countries.