On February 1, 2023, Finance Minister of India Nirmala Sitharaman presented the annual budget of India in Parliament. This was the last full budget of this government before the general elections in 2024 but even then, the government resisted the temptation to go for populist measures.
Balanced Budget with a focus on Grassroots level Infrastructure Development
This is the first budget of “Amrit Kaal” which completely sets the vision of the Prime Minister, at a time when the world is facing a difficult time in terms of economy, this budget can be termed as a balanced budget.
FM emphasised on seven focus areas during her speech, which she termed “Saptarishi”
These Saptarishi priority areas are:
1. Inclusive development
2. Reaching the last mile
3. Infrastructure and investment
4. Unleashing the potential
5. Green growth
6. Youth power
7. Financial sector
Further, the budget estimates economic growth of 7% for India, which is the highest among all major economies.
The budget also cut the fiscal deficit from 6.4% to 5.9% of GDP and project a further fall of 0.7% per year for the next two years.
The FM also states how efficient implementation of many schemes resulted in inclusive development such as:-
i. 11.7 crore household toilets under Swachh Bharat Mission,
ii. 9.6 crore LPG connections under Ujjawala,
iii. 220 crore Covid vaccination of 102 crore persons,
iv. 47.8 crore PM Jan Dhan bank accounts,
v. Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana
vi. Cash transfer of ₹ 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
FM also proposed launching of new scheme PM Matsya Sampada Yojana with a targeted investment of ₹ 6,000 crore to further enable activities of fishermen, fish vendors, and micro & small enterprises,
The outlay for PM Awas Yojana is being enhanced by 66 percent to over ₹ 79,000 cr.
The increase of capital expenditure by 33 % to 10 Lakhs Crore, which is 3.3 % of GDP, is a move that will surely create a huge number of job opportunities.
Further capital outlay of 2.4 Lakh Crore has been provided for the railway, which will enhance the railway network and facility in the country.
Now being a Chartered Accountant, I come to my favourite segment, which is Direct Tax.
For the Personal Income Tax at present, there are two schemes, first is the Old Income Tax regime and the second is New Income Tax regime.
In the old Income Tax regime, there are benefits of all the deductions, such as a Standard Deduction of ₹ 50000, home loan interest, HRA, insurance premium, specified investment, PF deduction etc.
In Old Scheme at present, income up to Rupees 5 Lakh is exempt from tax. If income is more than 5 lakhs, then the exemption limit is 2.50 Lakhs.
Present Slab of Old Income Tax Regime
| Net Income Range | Rate of Income tax |
| 0-Rs 2.50 lakh: | Nil |
| Rs 2.50 -5 lakh: | 5% of Income Tax |
| Rs 5 -10 lakh: | 20% of Income Tax |
| Above 10 lakh | 30% of Income Tax |
Present Slab Rate of New income tax regime
| Net Income Range | Rate of Income Tax |
| 0-Rs 2.50 lakh: | Nil |
| Rs 2.50 -5 lakh: | 5% of income tax |
| Rs 5-7.50 lakh: | 10% of income tax |
| Rs 7.50 -10 lakh: | 15% of income tax |
| Rs 10-12.50 lakh: | 20% of income tax |
| Rs 12.50-15 lakh: | 25% of income tax |
| Above 15 lakh | 30% of income tax |
Proposed changes in the budget (From 1 April 2023)
Old Income Tax Regime
There is no change in the old income tax regime.
In the New Income Tax regime now Standard Deduction of 50,000 will be allowed for a salaried person which was earlier in the old income tax regime only.
No tax for income upto ₹ 7 Lakhs per annum.
| Net Income Range | Rate of Income Tax |
| 0-Rs 3 lakh: | Nil |
| Rs 3-6 lakh: | 5% Income tax |
| Rs 6-9 lakh: | 10% Income tax |
| Rs 9-12 lakh: | 15% Income tax |
| Rs 12-15 lakh: | 20% Income tax |
| Above Rs 15 lakh: | 30% |
As per FM, now the new income tax regime is the default income tax regime, however, a person can opt for the old tax regime.
So now we can say that the government’s intention is very clear they want individuals to opt for the new income tax regime, and also discourage investment in tax-saving schemes.
The major impact will be on those claiming higher tax deductions such as HRA or Home Loan Interest, as they will not find any benefit in the new tax regime.
I am presenting a few examples of the impact of taxes in both the old and new regimes.
| ₹ 7 Lakh | Old Regime | New Regime |
| Taxable Income | ₹ 7,00,000 | ₹ 7,00,000 |
| Standard Deduction | ₹ 50,000 | ₹ 50,000 |
| Deduction Claimed | ₹ 1,50,000 | 0 |
| Net taxable Income | ₹ 5,00,000 | |
| Tax | – | – |
At the income of ₹ 7 Lakh, considering a deduction of ₹ 1,50,000, both schemes have nil tax.
| ₹ 9 Lakh | Old Regime | New Regime |
| Taxable Income | ₹ 9,00,000 | ₹ 9,00,000 |
| Standard Deduction | ₹ 50,000 | ₹ 50,000 |
| Deduction Claimed | ₹ 2,50,000 | 0 |
| Net taxable Income | ₹ 6,00,000 | ₹ 8,50,000 |
| Tax | 34,600.00 | 32,100.00 |
At an income of ₹ 9 Lakh, considering a deduction of ₹ 2, 50,000, the new scheme is beneficial.
| ₹ 15 Lakh | Old Regime | New Regime |
| Taxable Income | ₹ 15,00,000 | ₹ 15,00,000 |
| Standard Deduction | ₹ 50,000 | ₹ 50,000 |
| Deduction Claimed | ₹ 4,50,000 | 0 |
| Net taxable Income | ₹ 10,00,000 | ₹ 14,50,000 |
| Tax | ₹ 1,17,000.00 | ₹ 1,45,600.00 |
At an income of ₹ 15 Lakh, considering a deduction of ₹ 4,50,000, old scheme is beneficial.
| ₹30 Lakh | Old Regime | New Regime |
| Taxable Income | ₹ 30,00,000 | ₹ 30,00,000 |
| Standard Deduction | ₹ 50,000 | ₹ 50,000 |
| Deduction Claimed | ₹ 5,50,000 | 0 |
| Net taxable Income | ₹ 24,00,000 | ₹ 29,50,000 |
| Tax | ₹ 5,29,000.00 | ₹ 6,08,400.00 |
At an income of ₹ 30 Lakh, considering a deduction of ₹ 5,50,000, the old scheme is beneficial.
The old scheme is more beneficial for the person who claims deductions such as HRA, home loan etc.
One more change in direct taxes is that the threshold limit of the presumption scheme of taxation for specified professionals used to be ₹ 50 lakhs, but has been increased to ₹ 75 Lakhs.
Further, the reduction in basic customs duty on the import of components of mobile phones, and TV Sets, will make these items cheaper.
Conclusion of the budget
My conclusion is that overall it is a balanced budget, keeping in mind the current scenario of world economy.
The budget is focused on rural development and grassroots-level development.
(The author of this article is Rajan Kumar Jha. Mr Jha is a Chartered Accountant by profession and works with DS group)
