On February 1, Finance Minister, Nirmala Sitharaman announced the Decoding Budget 2023. She raised the personal income tax rebate limit and doled out Sops on small savings.
Nirmala Sitharaman’s fifth budget comes when the economy is slowing and there is a need for increased spending on social sectors and ramping up incentives for local manufacturing.
The budget was also accompanied by significant tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.
So, we are decoding the budget 2023 which will give you a complete scenario of the same. And, also know about the Budget for digital-first India.
Here are some major announcements of Decoding Budget 2023.
- Capital Expenditure target upto 33%
The finance minister raised the capital expenditure (capex) target by 33% to Rs 10 lakh crore, which will be 3.3% of the GDP.
Capex is the money that a government spends on developing buildings, machinery, equipment, schools, and infrastructure.
- Revised Fiscal Deficit estimated to be 5.9% of GDP
Nirmala Sitharaman has fixed the deficit for 2023-2024 at 5.9%, well below the 6.4% budgeted for 2022-2023. She aims to reach a deficit level below 4.5% of the GDP by 2023-2024.
A fiscal Deficit is the difference between the total revenue and total expenditure of the government.
- KYC procedure to be simplified
The Finance Minister proposed the use of Pan cards as a common identification for all digital sectors at government agencies. This change is brought out to simplify the KYC procedure and make it easier for the Income Tax Department to manage the documentation of PAN card holders in the country.
- No. of slabs reduced and new tax rate announced
Sitharaman announced to change the tax structure of 2020 by reducing the number of income slabs from 6 to 5 and increasing the tax exemption to Rs 3 lakh.
Tax slabs and rates for New Income Tax Regime
Income & Tax rate
Upto Rs 3 lakh – NIL
Rs 3 lakh to Rs 6 lakh – 5%
Rs 6 lakh to Rs 9 lakh – 10%
Rs 9 lakh to Rs 12 lakh – 15%
Rs 12 lakh to Rs 15 lakh – 20%
Above 15 lakh – 30%
MSMEs get Rs 9,000 crore corpus for revamped credit guarantee scheme
Sitharaman said that the revamped scheme will take effect from April 1, 2023, through an infusion of Rs 9,000 crore in the corpus.
Impact of Budget 2023 on the Indian Economy
The decoding budget 2023 will take the nation towards positive growth in the year 2023-24.
The Union Budget assumes that India’s nominal GDP will grow by 10.5% in 2023-24. That means the overall market value of the final goods and services produced in India during 2023-24 will be 10.5% higher than the market value of India’s GDP in the present financial year.
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