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Tuesday, March 19, 2024

Highlights of Union Budget 2023: No income tax up to ₹7 lakh, all-time high capex outlay

In a major relief to salaried class, Finance Minister Nirmala Sitharaman on Wednesday announced new tax slabs for 2023-24, under which no tax would be payable for income up to Rs 7 lakh per annum under the new income tax regime.

“Currently, those with an income of up to Rs 5 lakhs don’t pay any income tax. I proposed to increase the tax rebate limit to Rs 7 lakhs in the new tax regime,” Sitharaman said while announcing the new tax slabs in her speech while presenting the Union Budget for 2023-24.

A tax of 5 per cent would be levied on total income between Rs 3 lakh and Rs 6 lakh, 10 per cent tax would be imposed on income between Rs 6 lakh to Rs 9 lakh, it would be 15 per cent on income between the range of Rs 9 lakh to Rs 12 lakh.

On the income range of Rs 12 lakh to Rs 15 lakh, 20 per cent tax would be levied, while tax would be 30 per cent on income slab of Rs 15 lakh and above, the finance minister informed.

This change in personal income tax slabs is expected to raise disposable incomes and transition the taxpayers to the new tax regime.

Suman Chowdhury, Executive Director & Chief Analytical Officer, Acuite Ratings & Research said, “The rationalization of the personal income tax structure is expected to lead to two things (i) raise disposable incomes for the middle class and particularly younger taxpayers (ii) transition the taxpayers to the new tax regime with minimal exemptions and lower and simpler tax slabs. This is expected to give a moderate boost to domestic consumption.”

S. Ranganathan, Head of Research at LKP Securities said the Budget has put more money in the hands of the people through relief from Income Tax which to our mind is a very positive step.

Union Budget sets capex outlay at all-time high

The total capex outlay in the Union Budget for 2023-24 has been enhanced by 33 per cent from Rs 7.5 lakh crore to Rs 10 lakh crore which takes it to an all-time high of 3 per cent of GDP.

Finance Minister Nirmala Sitharaman announced in her Budget speech that capital investment outlay is being increased steeply for the third year in a row by 33 per cent to Rs 10 lakh crore, which would be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20.

This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd in private investments, and provide a cushion against global headwinds.

The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The ‘Effective Capital Expenditure’ of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5 per cent of GDP.

Suman Chowdhury, Executive Director & Chief Analytical Officer, Acuite Ratings & Research said the market was expecting a further commitment to public capital expenditure from the Govt and it has not disappointed. This will not only give a boost to the infrastructure sector but also be positive for employment and growth.

Anand Rathi, Founder & Chairman, Anand Rathi Group said a 33 per cent increase in capital expenditure to Rs 10 lakh crore, the highest ever will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination. Investment of Rs 2.4 lakh crore in Railways is commendable.

The gross borrowing estimate of 15.43 trillion rupees for next year is lower than the survey estimates of 15.77 trillion rupees. Hopefully, that should cheer the bond markets, Rathi said.

Centre cuts Customs duty on key mobile phone parts to boost local manufacturing

Paying heed to the consumer electronics industry’s demand, the Centre on Wednesday reduced basic Customs duty (BCD) on import of certain mobile phone parts and inputs like camera lens and continued the concessional duty on lithium-ion cells for batteries for another year.

Finance Minister Nirmala Sitharaman said the move is to further deepen domestic value addition in manufacture of mobile phones.

“The mobile phone production in India had increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at over Rs 2,75,000 crore in the last financial year, as a result of various initiatives of the government, including the ‘Phased Manufacturing programme’,” she said during her Union Budget 2023-24 speech in Parliament.

She also proposed to reduce the BCD on parts of open cells of TV panels to 2.5 per cent to promote value addition in the manufacturing of televisions.

A. Gururaj, MD, Optiemus Electronics Ltd, said that continuing the import duty cuts on camera lens and batteries for mobile manufacturing “is a welcome step and this will continue to fuel the remarkable growth India has witnessed in domestic manufacturing.”

Pankaj Mohindroo, Chairman of India Cellular and Electronics Association (ICEA), had earlier said that tariffs on inputs and components were an important barrier to increasing localisation.

ICEA had recommended that the tariff of 2.75 per cent (including social welfare surcharge), among other smaller tariffs, which have no beneficial impact and only create a burden for legitimate manufacturers, should be removed. ICEA also recommended reducing the inputs of the open cell at zero duty.

“The reduction in Customs duty on import of certain component parts for mobile phones is a welcome move, and will provide further impetus to deepen the domestic value addition, and in furthering the development of electronics components ecosystem in India,” Prabhu Ram, Head-Industry Intelligence Group, CMR, told IANS.

100 5G labs to develop new apps, services

With the 5G roll-out now gaining momentum in Bharat, the Centre on Wednesday announced to set up 100 labs in the top engineering institutions to develop 5G apps and services.

Bharat rolled out 5G services in October last year and several hundred cities and towns now have 5G services, courtesy Reliance Jio and Bharti Airtel.

“To realise new opportunities, business models and employment potential, the 5G labs will cover applications such as smart classrooms, precision farming, intelligent transport systems and healthcare applications,” said Finance Minister Nirmala Sitharaman in her Union Budget 2023-24 speech.

The rollout of 5G services can unleash new economic opportunities and help the country leapfrog the traditional barriers to development, spur innovations by startups and business enterprises, and advance the ‘Digital India’ vision, the Economic Survey for 2022-23 had said on Tuesday.

The Survey said that 5G could impact consumers directly through higher data transfer speeds and lower latency, “and use cases developed by telcos and start-ups in education, health, worker safety and smart agriculture, among others, are now being deployed across the country”.

“The massive wave of digitisation, increased penetration of smartphones, and adoption of technology have opened the doors for both traditional and new-age sectors,” it said.

According to Prabhu Ram, Head-Industry Intelligence Group, CMR, the proposal to set-up 100 labs for developing 5G applications at Indian engineering institutions “is a step in the right direction to realize new opportunities that 5G posits, and develop India-specific 5G use cases for education, healthcare and agriculture, among others”.

Industry veterans, economists and financial experts have largely welcomed the budget:

(With IANS inputs)

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