Budget 2023-24 highlights: Those with income below ₹7 lakh a year need not pay income tax

• Finance Minister Nirmala Sitharaman made five announcements in the personal income tax front including changing the income tax rebate limit.
  
• The allocation to PM Awas Yojana was also enhanced by 66% to ₹79,000 crore.
  
• PAN will be common identification for all digital systems which will increase ease of doing business. It will be facilitated via a legal mandate.
  

Finance Minister Nirmala Sitharaman said on Wednesday that those earning below ₹7 lakh income per annum need not pay any income tax in the new tax regime. This limit has been increased from ₹5 lakh earlier.

“This is for our hard working middle class,” she said in her Budget speech insisting that this is the announcement ‘everyone’ is waiting for.

The government also said it will increase its capital outlay by 33% to ₹10 lakh crore in FY24 – that’s 3.3% of GDP.

The allocation to PM Awas Yojana was also enhanced by 66% to ₹79,000 crore. She also allocated ₹15,000 crore over three years to the Schedule Tribe Mission.

The FM also allocated ₹35,000 crore as energy transition investment. She also said that FY23 fiscal deficit at 6.4%, adheres to budget estimates. She fixed FY24 fiscal deficit target at 5.9%.

India is heading towards a bright future despite challenges, as she delivered her fifth budget in the parliament.

She identified seven priorities for the budget — inclusive growth, reaching the last mile (digital public infra for agriculture), infrastructure and investment, unleashing potential, green growth, youth power, and financial sector.

“Three things will be in focus – ample opportunities for citizens to youth to fulfill growth, strong impetus to growth and job creation and strengthening macro economic stability,” Sitharaman said. It is the last budget that the government will deliver before India goes into a general election next year.

Here are the Budget speech highlights:

5 Personal Tax Announcements

• The FM today changed the income tax rebate limit from ₹5 lakh per annum to ₹7 lakh per annum in the new tax regime. Those with an annual income of ₹7 lakh and below need not pay income tax.
  
• In the second announcement, FM said that she is changing the tax structure and reducing the number of slabs and increasing the tax exemption limit, under the new tax regime. The new tax rates are
  

• The third proposal is for the salaried class and the pensioners including family pensioners. She extended the benefit of standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakh or more will thus stand to benefit by ₹52,500.
  
• The FM reduced the highest surcharge rate in personal income tax from 37% to 25% in the new tax regime. This would result in reduction of the maximum tax rate to 39%.
  
• The limit of ₹3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees is increased to ₹25 lakh.
  

She also said that the new income tax regime will be the default tax regime. However, citizens can continue to avail the benefit of the old tax regime.

Other speech highlights

• It’s the first budget in Amritkaal. It hopes to build on the foundation laid in previous Budgets and the blueprint drawn for India@100.
  
• Current year eco growth is estimated to be at 7% – highest among all major economies in spite of the massive slowdown globally caused by war and Covid-19.
  
• Despite challenges, India is heading to a bright future.
  
• The government will provide 5 kg grains to 81 crore people free of cost. This will result in a food subsidy bill of ₹2 lakh crore for the next one year.
  
• Three things will be in focus – ample opportunities for citizens to youth to fulfill growth, strong impetus to growth and job creation and strengthening macro economic stability.
  
• Seven priorities – inclusive growth, reaching the last mile (digital public infra for agriculture), infrastructure and investment, unleashing potential, green growth, youth power, financial sector.
  
• Agricultural credit target raised to ₹20 lakh crore. An agricultural accelerator fund to be set up.
  
• 157 new nursing colleges to be started.
  
• Age appropriate reading material to be provided to children and adolescents with non-curricular titles via National Book Trust and more to make up for the loss of learning during the pandemic.
  
• Allocation to PM Awas Yojana enhanced by 66% to ₹79,000 crore.
  
• ₹15,000 crore allocated over three years to the Scheduled Tribe Mission.
  
• Computerisation of 63,000 primary agricultural credit societies with an investment outlay of ₹2,516 crore.
  
• More than 39,000 compliances have been reduced and over 3,400 legal proceedings have been decriminalised to enhance Ease of Doing Business.
  
• PAN will be common identification for all digital systems which will increase ease of doing business. It will be facilitated via a legal mandate.
  
• ₹35,000 crore allocated for energy transition investment.
  
• ₹7,000 crore for the third phase of e-courts.
  
• Will facilitate 1 crore farmers to adopt natural farming methods. For this, 10,000 bio-input resource centers will set-up.
  
• A unified skill India digital platform will be set-up linking with employers, facilitating entrepreneurship schemes and stipends to students.
  

Customs Duty

The number of basic customs duty rates on goods reduced, other than textiles and agriculture, from 21 to 13. There are minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha, FM said in her speech.

Savings & Deposits

Mahila Samman Bachat Patra – a one-time small savings scheme called Mahila Samman Savings Certificate will be made available for a 2-year period upto March 2025. This will offer ₹2 lakh for women and girls for 2 years at a FD rate of 7.5% with partial withdrawal option.

The maximum deposit for senior savings increased from ₹15 lakh to ₹30 lakh.

Fiscal Deficit

• FY23 fiscal deficit retained at 6.4%, adheres to budget estimates.
  
• FY24 fiscal deficit target is at 5.9%. To bring fiscal deficit below 4.5% by FY25-26
  

Calamity related duty on cigarettes hiked by 16%.

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