According to an article published in India Today, Finance Minister Nirmala Sitharaman mentioned the word ‘tax’ 51 times in her Union Budget 2023-24 speech. With a focus on changing tax slabs and even introducing a new regime to file taxes, it is not surprising that the budget speech was focused on this. During the budget speech, Sitharaman highlighted the government’s shifting focus toward the middle class.
For the middle-class working individual, the budget 2023-24 is an attempt at ensuring more money in the hands of those who are earning less and facilitating more job opportunities, there has been an undeniable flipside. The revised allocation towards education and scholarships has been causing an uproar from the opposition parties.
As the last Union Budget presented before the Lok Sabha elections in 2024, this budget tries to incentivise the private sector in the nation’s economy to invest in increasing production, in turn creating more jobs and driving growth. There is also a push towards increasing privatisation and disinvestment, for capital expenditure and increasing revenues.
While the finer details of the Union Budget 2023-24 are mind-boggling to this writer, there have been certain takeaways that are easy enough to understand.
What Does It Mean For Your Taxes?
While the new tax regime was proposed in 2020, there has been a lack of people who decided to switch to it. This budget speech was working towards making a change with this. This attempt is being driven by the overhauling of these tax slabs and additional changes to standards of operations that are being offered to people across the strata of taxpayers if they switch to the new income tax regime.
The new tax regime proposed in the new Union Budget increases the threshold at which income tax comes into action, thereby ensuring more money in the hands of those who are earning less than 60,000 a month. Under this new system, income tax is only applicable to those who are earning more than Rs.7 lakh a year, as opposed to Rs. 5 lakhs a year in the old regime.
But on the other hand, the government is also appealing to the super-rich under this scheme by creating a massive cut in income tax surcharge. It has been reduced from 37 percent to 25 percent under this regime.
While this new regiment is attempting to increase compliance with the tax system, it is also attempting to direct money from tax-focused saving attempts and rather pushing it towards discretionary spending or investment in markets. One of the tried and true tax-focused schemes that many have taken up was tax-free insurance policies. For the average salaried individual, insurance upwards of Rs.5 lakhs being taxable is something that is sending waves across the market.
Vying For Savings
The new Union budget proposes more incentives for senior citizens and women, for them to save more money at better interest. The maximum deposit limit for Senior Citizen Savings Scheme has been increased from Rs.15 lakh to 30 lakhs. The current interest rate of this scheme is 8 percent p.a., which is much higher as compared to the standard Fixed Deposit.
The union budget also introduced a new small savings scheme for women, which will be made available for two years up to March 2025. This offers deposit options up to 2 lakhs for women with a fixed return interest rate of 7.5 percent.
Under the Monthly income account scheme, the maximum deposit that can be made into an individual account has been increased from Rs.4.5 lakh to Rs.9 lakh and for a joint account, it has been increased to Rs. 15 lakhs, as opposed to the 9 lakhs it was earlier.
A Hike In Customs
Cigarettes, gold and silver jewellery and even compounded rubber will have increased customs rates to answer to. The duties on cigarettes are increasing by a whopping 16 percent - which means you might be paying an extra Rs.2 on the average cigarette worth 18 rupees. The finance minister proposed to increase the duty on silver, gold, and platinum jewelry, while reducing the customs duty on seeds for lab-grown diamonds.
Certain items like camera lenses, lithium-ion batteries, parts of TV panels, inputs for mobile manufacturing even denatured ethyl alcohol, which all help certain industries become cheaper. But there is an increase in the levies on toys, naphtha, and automobiles due to a reduction in the number of custom duty rates.
The Education And Agriculture Concern
While there has been a lot of conversation around the above-mentioned tax changes and savings schemes, there has been an increased concern about the reduced allocation towards education and agriculture industries.
With the disbandment of the Maulana Azad National Fellowship, and now the 41 percent cut in allocation for pre-matric scholarships for OBCS, EBCs, and DNTs is something that is concerning a large segment of people. The national fellowships for SCs have been reduced from Rs.173 crores to Rs. 163 crores, while that of STs remains at Rs.145 crores, the same as the current year.
While there is an increase in the number of agriculture-related schemes and green initiatives that are being proposed, there have been concerns regarding the fact that the actual allocation of budgets for agriculture saw a 5% reduction in the Union Budget 2023-24.
As this new budget comes into action, there is bound to be a lot of change that affects the common people. While it is hard to decipher the nuances of the economic budget for a layperson, it is prudent that one should look a little closer at these reforms, which could impact our lives in a major way. Being aware of the new regimes can help make the most of being within the system and use it to ensure that you are being fiscally aware and responsible.
If you would like to read the official union budget report in its entirety, you can find it here.
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