Union Finance Minister Nirmala Sitharaman presented the fifth budget in February 2023. 

The finance minister believes that India is poised for a bright future. With India’s economy ranking fifth in the world, the current GDP of India is $3.820 trillion. Moreover, as the Reserve Bank of India forecasted, India’s inflation rate is 5.3%, down from 6.5% this financial year.

So what does budget 2023 have for an ailing income? Let’s find out!

6 Key measures in the 2023-24 budget to support struggling incomes

The 2023-24 Indian economy budget introduces six measures to support struggling incomes. These include tax relief, training programs, investment, and savings opportunities. Moreover, the budget 2023 focuses on seven key areas:

• Inclusive development
• Infrastructure and investment
• Green growth
• Reaching the last mile
• Unleashing potential
• Youth power
• Financial sector

Read on to understand better:

Tax relief

Changes in income tax slabs and rebates in the 2023 budget have brought relief for the taxpayer. For example:

The new tax system mentions an increase in the individual income tax rebate from ₹5 lakhs to ₹7 lakhs. The new tax rates are as follows:

• Also, the government aims to reduce the maximum surcharge rate from 37% to 25% in the new tax system. 
• Furthermore, the budget mentions an increase in the presumptive tax scheme’s upper limit from ₹50 lakhs to ₹75 lakhs. As a result, professionals with gross receipts of up to ₹75 lakhs can present 50% of their gross receipts as taxable income and pay taxes at the appropriate slab rates.
• Moreover, there has been an increase in the tax exemption limit on leave encashment for non-government salaried employees’ retirement from ₹3 lakhs to ₹25 lakhs.

Increased investment opportunities

By raising the investment cap for savings schemes and introducing new financial products, the budget aims to provide citizens with more options for investing their money. This can help increase capital flow into the economy. Here’s what you need to know:

• There has been an increase in the investment limit for modest savings programs from ₹15 lakh to ₹30 lakh. One such program is the Senior Citizen Savings Schemes (SCSS). 
• Furthermore, under the Monthly Income Scheme (MIS), there has been a rise in the maximum investment amount in a single account from ₹4.5 lakhs to ₹9 lakhs. 
• Moreover, there is an increase in the ceiling for joint accounts from ₹9 lakhs to ₹15 lakhs.
• Also, the finance minister introduced a new savings plan called the Mahila Samman Saving Certificate for women. This plan has a two-year term and a 7.5% interest rate. Moreover, it offers the option of partial withdrawal.
• The government has decided to limit capital gains tax deductions for investments in residential real estate to ₹10 crores. As a result, it can help tax high-value capital gain sale of residential properties. 

Infrastructure development

The government has prioritized improving the living conditions of its citizens. Improving living conditions can create healthier, more productive citizens, reduce healthcare costs, attract investment, and promote social and economic stability:

• The PM Awas Yojana budget has seen a 66% increase to ₹79,000 crores. 
• Also, all cities and municipalities will now permit 100% mechanical desludging of septic tanks and sewers to improve sanitation practices. 
• Furthermore, the Railways have received their largest capital outlay allocation of ₹2.4 lakh crore since 2013-14. 
• The government plans to revive 50 airports, water aero drones, and sophisticated landing fields to enhance regional air connectivity.

Push for ease of doing business

Supporting ease of doing business can help an ailing economy attract investment, create jobs, increase competition, and promote economic growth. As a result, the government is taking steps to improve the ease of doing business, such as:

• Decriminalizing over 3,400 laws and reducing over 39,000 compliances
• Making  PAN a standard identifier for all digital systems of government entities
• Increasing capital spending by 33%
• Providing interest-free loans for capital expenditures
• Launching new programs to incentivize research and support clean initiatives

Boost for MSMEs

The Indian economy is highly influenced by MSMEs (Micro, Small, and Medium enterprises). It has the potential to pull our economy out of the slump. So the budget includes several measures to boost their growth. For example, increasing these businesses’ credit limits facilitates their development. 

The following are the highlights for MSMEs:

• From April 1, 2023, the updated Credit Guarantee Scheme for MSMEs will be operational with an injection of ₹9000 crore into the corpus. This will allow for an additional ₹2 lakh crore in collateral-free credit guarantees. As a result, there will be a 1% reduction in the cost of borrowing.
• Also, the PM Awaas Yojana will receive a 64% increase in funding, with the total amount allocated now being ₹79,000 crores. So this increase in funding will benefit commercial vehicles and tractors used to transport building materials.
• Moreover, the government has decided to increase the cap on cash deposits and loans made by Primary Agricultural Credit Societies to ₹2 lakhs per member.

Education and skill development

The budget includes several initiatives to boost education and skill development. For example, establishing new schools and universities and increasing funds for vocational training. As a result, individuals may develop the skills and knowledge they need to increase their earning potential. Here’s how:

• • The finance minister launched the PM Kaushal Vikas Yojana 4.0. It aims to provide skill training to young people for the next three years.
  • Also, to achieve the goal of “Make AI in India and Make AI work for India,” the government will establish three Centers of Excellence for Artificial Intelligence in prestigious educational institutions.
  • Furthermore, the finance minister announced the establishment of 157 new nursing colleges to coexist with the 157 medical colleges operational since 2014.
  • Plus, over three years, the Center will hire 38,800 teachers and other staff to work in 3.5 lakh tribal students’ 740 Eklavya Model Residential Schools.

Wrapping up

The budget showcases the government’s dedication to ensuring continued economic growth, as evidenced by announcements, rebates, and reforms to relieve the ailing income.

If you have questions regarding taxation, you can seek guidance from GJM & Co. Our team of tax accountants can assist with tax policies, enabling you to understand them better.  

Should you have any queries or need consultation, Schedule a Call today or write to us at info@gjmco.in.