Union Budget 2023 Highlights: No tax on income up to ₹7 lakh

Finance Minister Nirmala Sitharaman presented the last full Union Budget of the Narendra Modi government before the general elections next year. In her Budget speech, Sitharaman increased the income tax rebate under the new tax regime to ₹7 lakh from ₹5 lakh currently.

The overhauling of the new tax regime is expected to put more money into the hands of the salaried taxpayers, giving a big boost to consumption.

Catch all the updates here:

5:10 pm New tax regime is more attractive, says the finance minister.

5:01 pm The Government is not compelling anyone to move from the old tax regime to the new one, says Nirmala Sitharaman at post-Budget press conference.

4:40 pm Marine products recorded the highest export growth benefitting farmers in the coastal states of the country. To further enhance the export competitiveness of marine products, particularly shrimps, duty is being reduced on key inputs for domestic manufacture of shrimp feed, says FM.

4:28 pm The government has cut the basic customs duty on parts of open cells of TV panels to 2.5% from 5%.

4:15 pm Tax on capital gains can be avoided by investing proceeds of gains in residential property. This is proposed to be capped at ₹10 crore, says FM Nirmala Sitharaman.

4:10 pm The rate of Tax Collected at Source (TCS) for foreign remittances for education and for medical treatment will continue to be 5% for remittances in excess of ₹7 lakh. Similarly, the rate of TCS on foreign remittances for the purpose of education through loan from financial institutions is proposed to continue to be 0.5% in excess of ₹7 lakh. However, for foreign remittances for other purposes under Liberalised Remittance Scheme (LRS) and purchase of overseas tour programme, it is proposed to increase the rates of TCS from 5% to 20%, according to Budget 2023.

3:50 pm Finance Minister Nirmala Sitharaman reduced the tax exemption limit on high-value insurance policies. "It is proposed to provide that where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above ₹5 lakh, income from only those policies with aggregate premium up to ₹5 lakh shall be exempt," the finance minister says.

3:30 pm The Capex increase of 33% and a capital outlay of ₹2.40 lakh crore for railways is a bold move to create jobs and improve the infrastructure development in the country, says Rajiv Sabharwal, managing director & CEO, Tata Capital.

"The overall quality of expenditure outlay provides a strong guard against global headwinds and will create impetus for private investments. This will also offer a vast scope for domestic consumption," Sabharwal says.

3:15 pm "As our nation marches towards Amrit Kaal, the intended infusion of ₹79,000 crore towards affordable housing is a positive move. Its's a win-win situation fortifying our nations rural infrastructure and adding power to lower and middle income groups," says Girish Kousgi, MD & CEO, PNB Housing Finance.

3:10 pm "The budget's continued emphasis on capital expenditure suggests an ongoing improvement in the quality of spending. Although the gradual fiscal consolidation trend remains intact and will help to stabilize the government's debt burden relative to nominal GDP, the high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths, including its high growth potential and deep domestic capital markets," says Moody's.

3:05 pm "Although changes to the tax regime will forego some tax revenue, the budget predicts largely buoyant revenue on the back of strong nominal GDP growth and gains from tax administration. This will help to mitigate pressures on debt affordability from increasing debt servicing costs associated with rising interest rates," says Moody's.

3:00 pm According to Moody's, the narrower deficit forecast in the Union government budget for 2023-24 underscores the government's commitment to longer-term fiscal sustainability and supports the economy amid high inflation and a challenging global environment.

2:55 pm Stock markets erase early gains despite big announcements in the Budget. Nifty 50 falls below 17,500 level; Sensex stays under 60,000.

1:48 pm Finance Minister Nirmala Sitharaman announced a reduction in customs duty on import of certain mobile phone parts including camera lens. "To further deepen domestic value addition in manufacture of mobile phones, I propose to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year," says FM.

1:15 pm To promote renewable energy, the government will construct an inter-state transmission system for evacuation and grid integration of 13 gigawatt renewable energy from Ladakh with investment of ₹20,700 crore including central support of ₹8,300 crore.

12:59 pm As a result of these proposals, revenue of about ₹38,000–37,000 crore in direct taxes and ₹1,000 crore in indirect taxes will be forgone while revenue of about ₹3,000 crore will be additionally mobilised, says FM Nirmala Sitharaman. The total revenue forgone is about ₹35,000 crore annually.

12:45 pm The limit of ₹3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was ₹30,000 per month, says the finance minister. "In line with the increase in government salaries, I am proposing to increase this limit to ₹25 lakh," says FM.

12:42 pm "The highest tax rate which in our country is 42.74%. This is among the highest in the world. I propose to reduce the highest surcharge rate from 37% to 25% in the new tax regime. This would result in reduction of the maximum tax rate to 39%," says FM.

12:39 pm For the salaried class and the pensioners including family pensioners, the finance minister extended the benefit of 34 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," says Nirmala Sitharaman.

12:35 pm "An individual with an annual income of ₹9 lakh will be required to pay only ₹45,000. This is only 5% of his or her income. It is a reduction of 25% on what he or she is required to pay now, ie, ₹60,000. Similarly, an individual with an income of ₹15 lakh would be required to pay only ₹1.5 lakh or 10% of his or her income, a reduction of 20% from the existing liability of ₹1,87,500," says the finance minister.

12:30 pm Under the new tax regime, the tax rates are as follows:

0 to ₹3 lakh - nil

₹3 to 6 lakhs - 5%

₹6 to 9 lakhs - 10%

₹9 to 12 lakhs - 15%

₹12 to 15 lakhs - 20%

above ₹15 lakh - 30%

12:26 pm New tax regime will now be the default regime. However, taxpayers can opt for the old tax regime, says FM.

12:24 pm "I introduced the new personal income tax regime in 2020 with 6 income slabs, starting from ₹2.5 lakhs. I propose to change the tax structure in this regime by reducing the number of slabs to 5 and increasing the tax exemption limit to ₹3 lakhs," says FM.

12:22 pm Govt hikes income tax rebate limit to ₹7 lakh under the new tax regime. Currently, those with income up to ₹5 lakh do not pay any income tax in both old and new tax regimes.

12:10 pm Kitchen chimney to get costlier with hike in customs duty. Taxes on cigarettes hiked by 16%.

12:05 pm FY24 fiscal deficit target at 5.9% of GDP, says FM. Fiscal deficit to be below 4.5% of GDP by 2025-26, she adds.

12:03 pm Mahila Samman Savings Certificate scheme for women will be made available up to March 2025, offering fixed interest rate of 7.5%, says FM.

11:55 am The finance minister has allocated ₹19,700 crore to the National Hydrogen Mission. The objective is to reach hydrogen production capacity of 5 metric million tonnes by 2030, says FM.

11:53 am To skill the youth for international opportunities, 30 Skill India International Centres will be set up across different states, says FM Nirmala Sitharaman.

11:51 am "The 64% increase in allocation for PM Awaas Yojana to ₹79,000 crore will be a positive for commercial vehicles and tractors used for moving materials for construction," says CRISIL.

11:50 am "The 33% higher capital outlay of ₹10 lakh crore will fast-track implementation of high-multiplier government programmes such Bharatmala, Ghatishakthi, Parvatmala and Sagarmala," says CRISIL.

11:48 am FM announces ₹35,000 crores priority capital for energy transition. Battery storage to get viability gap funding. "Continuing the current lower customs duty on lithium ion cells for next fiscal will help keep the cost of battery cells under check. Customs Duty exemption on capital equipment for manufacturing battery cells will encourage investments to manufacture battery cells," says CRISIL.

11:47 am Capital outlay of ₹2.40 lakh crore for Indian Railways in next financial year.

11:45 am "For business establishments required to have Permanent Account Number, the PAN will be used as a common identifier for all Digital Systems of specified government agencies," says FM.

11:44 am Research grant will be provided to one of the IITs for environment friendly lab grown diamonds to reduce diamond imports.

11:35 am The 50-year interest free loan to state governments has been extended for one more year, says FM Sitharaman.

11:29 am For Eklavaya Model Residential Schools, the Centre will recruit 38,800 teachers and support staff for 740 schools serving 3.5 lakh tribal students in the next 3 years, says FM Nirmala Sitharaman.

11:28 am Capital expenditure to be increased by 33% to ₹10 lakh crore, which is 3.3% of GDP and 3 times of the outlay made in 2020, says FM Sitharaman.

11:27 am PM Awas Yojna outlay to be enhanced by 66% to ₹79,000 crore, says FM.

11:22 am New programme to promote research in pharma will be taken up via Centre of Excellence, says FM.

11:20 am The agricultural credit target will be increased to ₹20 lakh crores with a focus on animal husbandry, dairy and fisheries, says FM Sitharaman. The government will launch a sub-scheme under PM Matsya Sampada Yojana with an outlay of ₹6,000 crore to further enable those involved in fisheries, says Finance Minister Nirmala Sitharaman.

11:16 am Promotion of tourism will be taken up on mission mode with active participation of states, the convergence of government programmes and public-private partnerships, says the finance minister.

11:15 am An Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs.

11:13 am "Our vision for the Amrit Kaal includes a technology-driven and knowledge-based economy, with strong public finances and a robust financial sector," says FM.

11:10 am "The world has recognised India as a bright star, our growth for current year is estimated at 7%, this is the highest among all major economies, in spite of massive global slowdown caused by pandemic and the war," says Sitharaman.

11:08 am "The government's efforts since 2014 have ensured for all citizens, a better quality of life & life of dignity. The per capita income has more than doubled to ₹1.97 lakh. In these 9 years, the Indian economy has increased in size from being 10th to 5th largest in the world," says the finance minister.

11:05 am "In these times of global challenges, India's G20 presidency gives us a unique opportunity to strengthen India's role in the world economic order," says Sitharaman.

11:03 am "During the Covid-19 pandemic, we ensured that nobody goes to bed hungry with a scheme to supply free foodgrains to over 80 crore persons for 28 months," says FM Nirmala Sitharaman.

11:01 am FM Nirmala Sitharaman begins her Budget speech. "This is the first Budget in Amrit Kaal," says FM.

10:52 am The Union Cabinet has approved the Budget 2023. Union Finance Minister Nirmala Sitharaman will present the Budget shortly.

10:45 am "This will be the best budget. This will be a pro-poor, pro-middle class budget," says Parliamentary Affairs Minister Pralhad Joshi to newswire ANI.

10:30 am Budget copies brought to Parliament, ahead of Budget presentation at 11am.

10:25 am Sensex recovers 60,000 level ahead of Finance Minister's Budget speech.

10:20 am Union Cabinet meeting chaired by PM Modi begins at Parliament. After the Cabinet approves the Budget 2023, it will be presented in Parliament by FM Sitharaman.

10:15 am Prime Minister Narendra Modi reaches the Parliament.

10:07 am Finance Minister Nirmala Sitharaman arrives at the Parliament ahead of her Budget speech.

9:45 am Union Minister of Finance and Corporate Affairs Nirmala Sitharaman, MoS Bhagwat Kishanrao Karad, MoS Pankaj Chaudhary and senior officials of the Ministry of Finance called on President Droupadi Murmu at Rashtrapati Bhavan before presenting the Union Budget 2023-24.

This comes a day after the finance minister tabled the Economic Survey 2022-23 in the Lok Sabha on Tuesday. According to the Economic Survey, India will witness GDP growth of 6% to 6.8% in 2023-24, depending on the trajectory of economic and political developments globally.