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Key Changes of the Union Budget 2023 You Must Know

With an increase in the basic exemption limit and refund, as well as modifications to the income tax slabs, Union Budget 2023 has some impactful changes to offer.

  • 2,606 Views | Updated on: May 24, 2024

Key takeaways

  • The basic exemption limit for individuals has increased from ₹2.5 lakh to ₹3 lakh.
  • Union Budget has raised the maximum investment limit of the Senior Citizen Savings Scheme.
  • One of the main priorities outlined in the budget is the promotion of renewable and green energy.
  • The new budget has earmarked a record-high sum of ₹1.12 lakh crore for education.

The Union Budget 2023 is one of the most significant financial statements presented by the Indian government each year. It outlines the government’s revenue and expenditure for the upcoming financial year, along with various policy measures to support economic growth and development.

The government’s primary focus is to boost economic growth and create more job opportunities. This year’s new budget has introduced several key changes in various sectors, such as healthcare, education, infrastructure, agriculture, and taxation, among others.

In this article, we will take a closer look at the key objectives of the government budget 2023 and how they are likely to impact the Indian economy and its people. From new policies to increased funding for various sectors, we will explore the details of this highly-anticipated budget and provide insights on how it may shape the country’s economic future.

What is Union Budget?

The Union Budget is an annual financial statement presented by the Government of India in Parliament. It is one of the most significant economic events in the country, as it sets the tone for the economic policy for the coming year. It also reflects the government’s priorities and initiatives for various sectors of the economy, including agriculture, infrastructure, education, health, and defense.

The Union Budget is prepared by the Ministry of Finance, and its presence in the Parliament is an elaborate affair, marked by much anticipation and media scrutiny. This financial statement serves as a critical tool for the government to meet its socio-economic objectives and is an essential component of India’s governance and policymaking framework.

Key changes of the Union Budget 2023

The Union Budget 2023 was eagerly anticipated by many as it was to come at a time when India was facing several challenges, such as rising inflation, slow economic growth, and unemployment. Union Budget for 2023 has been designed to stimulate economic growth, promote job creation, and improve the standard of living for the citizens of India.

Income Tax Regime

The Union Budget income tax slabs have been modified in the new Budget 2023 under the new tax regime. The basic exemption limit for individuals has increased from ₹2.5 lakh to ₹3 lakh. This means that individuals with an annual income of up to ₹3 lakh will not have to pay any income tax.

For both the previous and current tax regimes, the maximum income tax rebate granted under Section 87A of the Income Tax Act was ₹5 lakh. As a result, people with annual incomes up to ₹5 lakh were exempt from paying taxes. The previous tax system offered exemptions but had a higher tax rate. While the new tax system featured a reduced tax rate, there were no exemptions available. The tax-free threshold has now been raised to ₹7 lakh, but only for those who opt for the new tax structure.

Income tax brackets under the proposed tax framework (New Regime) for fiscal years 2023-24

Income tax slabs

Income tax rate

Between ₹0 and ₹3,00,000

0%

Between ₹3,00,001 and ₹6,00,000

5%

Between ₹6,00,001 and ₹9,00,000

10%

Between ₹9,00,001 and ₹12,00,000

15%

Between ₹12,00,001 and ₹15,00,000

20%

Above ₹15,00,001

30%

Senior Citizen Saving Scheme

Budget 2023 has raised the maximum investment limit for the Senior Citizen Savings Scheme (SCSS) from ₹15 lakh to ₹30 lakh. Here are the key features of SCSS:

  • Individuals who are 60 years or above can apply.
  • Retired civilian employees aged between 55 and 60 years can also invest, provided they invest within one month of receiving their retirement benefits.
  • Any excess deposit made in the SCSS account will be promptly refunded to the depositor, and only the PO Savings Account interest rate will apply from the date of the excess deposit to the refund date.
  • Investments made under this scheme are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.

Renewable Energy

One of the main priorities outlined in the new budget is the promotion of renewable and green energy. The budget proposes several measures to support the renewable energy sector, such as:

  • Encouraging cities and states to create and implement carbon reduction strategies, providing viability gap funding of up to 4,000 MWh for battery energy storage, allocating ₹35,000 crores.
  • Achieving net zero emissions and transition to cleaner energy sources, produce 5 million metric tonnes of green hydrogen by 2030.
  • Providing ₹20,700 crores for the construction of an interstate transmission system.

    These proposals are a step forward in India’s pursuit of its green energy targets.

Healthcare

In the 2023-24 Union Budget, the government introduced a significant change in the healthcare sector aimed at transforming it. The new budget includes the establishment of 157 new nursing colleges located alongside existing medical colleges. This move reflects the government’s focus on ensuring an adequate number of frontline medical professionals in hospitals and bridging the gap in nurse-to-bed ratios as India aims to become a preferred healthcare destination. Additionally, healthcare providers are prioritizing the creation of facilities in tier 2 and tier 3 cities.

The health sector received an allocation of ₹89,155 crores in the 2023-24 Union Budget, an increase of around 13% from the previous year’s allocation of ₹79,145 crores. Of the allocated amount, the Department of Health and Family Welfare will receive ₹86,175 crores, while the Department of Health Research will receive ₹2,980 crores to support these initiatives.

Education Sector

The Union Budget has earmarked a record-high sum of ₹1.12 lakh crore for education, representing an 8.2% increase from the amount allocated in the 2022-23 budget. The previous budget estimated a sectoral allocation of ₹1,04,277.72 crore, but the revised estimate reduced it to ₹99,881.13 crore. The current year’s allocation marks a 13% increase from the revised estimate.

Wrapping Up

The Union Budget 2023 has several key changes that are important for everyone to know. It focuses on strengthening the economy, boosting growth, and improving the quality of life of citizens across the nation. The government has proposed to allocate a significant amount to various sectors. Overall, the budget has something for everyone, and it is expected to have a positive impact on the economy and the lives of citizens.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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