Decoding Budget 2023: A deep dive into all major Budget announcements and their impact

The last full Budget of the Narendra Modi government before the next Lok Sabha elections brought in the much-awaited relief for the salaried class as well as a bonus for the richest while focusing on two main aspects – growth and fiscal consolidation.

Outlining the seven priorities that the government called 'Saptarishi', Finance Minister Nirmala Sitharaman announced a host of measures in the crucial Budget including big capex boost, infrastructure upgrades, major changes in personal income tax, incentives for key sectors, key announcements for tribals, youth and women, among others.

As is the effect of every Union Budget, certain items like capital goods got cheaper while some like cigarettes became expensive with changes in certain duties and taxes.

For many, Budget being a complex subject, is hard to track. Here's decoding the entire Budget with a focus on its impact of financial markets and the personal finance space.

What are the 7 priorities?

Among the 7 priorities – called ‘Saptarishi’ – of the government are:

-Inclusive development

-Last mile delivery

-Infrastructure

-Green growth

-Youth power

-Financial inclusion

-Unleashing potential

What does the Budget indicate about the economy?

The Budget 2023 reinforced faith in the domestic economy which remains resilient amid challenges.

In her Budget 2023 speech, the FM highlighted that India is expected to grow at 7 percent in the current fiscal year, and the Indian economy has increased in size from being 10th to 5th largest in the last nine years.

In order for the economy to sustain its momentum, she announced a 33 percent increase in Capex to 10 lakh crore. The estimated effective capital spending for the centre is ₹13.7 lakh crore, or 4.5 percent of GDP.

The government expects tax collections to be at ₹33.6 lakh crore in 2023-24 which is around 10.4 percent higher than in the current financial year.

The fiscal deficit for 2023-24 is expected to be 5.9 percent of the gross domestic product (GDP), lower than the target of 6.4 percent of the GDP in 2022-23.

How big is the capex boost?

An increase in capital expenditure was one of the top highlights of the Budget 2023. A 33 percent increase in capital expenditure, which would be 3.3 percent of GDP, will be almost three times the outlay in 2019-20. This covers railways, road construction, and green initiatives. Analysts say all these categories have significant multiplier effects on the economy and should help improve India’s long-term growth potential.

What is there for the retail investors?

The Budget announcements are favourable for the market as they focus on accelerating economic growth through aggressive capital expenditures while maintaining fiscal prudence.

"Fiscal prudence, the clear glide path for fiscal consolidation, massive Capex of ₹10 lakh crores, relief to income tax payers, credible growth and tax projections for FY24 and above all the growth orientation of the Budget makes it market-friendly," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The fine details of the Budget reveal several other benefits for retail investors. Some of them are:

(A) An integrated IT site will be built to make it simple for investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.

(B) Norms and standards for education at the National Institute of Securities Markets will be developed, regulated, maintained, and enforced by the Securities and Exchange Board of India (SEBI). It will be able to recognise the awarding of degrees, diplomas, and certificates in order to strengthen the capacity of functionaries and professionals in the securities market.

(C) Certain changes to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are suggested in order to improve bank governance and strengthen investor protection.

(D) Taxes on long-term capital gains (LTCG) and short-term capital gains (STCG) remain unchanged.

Also Read | Budget 2023: How the budget affects HNIs? Some good, some bad news

What sectors one should bet on?

Brokerages and analysts suggest investors should focus on consumption, credit and infra stocks.

Parminder Varma, Chief Business Officer, Sharekhan by BNP Paribas, highlighted that the Union Budget further reinforced conviction on the three investment themes of capex, credit and consumption.

"In line with the three investment themes, our preferred picks are ITC, HDFC Bank, SBI, M&M, L&T, Bharti Airtel among large caps while in the midcap/smallcap we like Cummins, Trent, Indian Hotels, Finolex Cables, Dalmia Cement, GNA Axles," said Varma.

Brokerage firm ICICI Securities has suggested the following top picks and themes:

(A) Investment cycle and manufacturing: L&T, BHEL, Siemens, Astral, Green Panel, Century Ply, Phoenix Mills, Brigade Enterprises, UltraTech, JSPL, Jindal Stainless, BEL, Solar, TCI Express, Gati, ONGC, IOCL, IGL, NTPC, NHPC, Coal India, Bharti Airtel, Tata Communications, Gujarat Fluorochemicals, Ashok Leyland, Mahindra CIE, Balkrishna Industries, Dr Reddy’s, Torrent Pharma.

(B) Credit growth: SBI, Axis Bank, Fusion

(C) Consumption: HUL, ITC, Jyothy Labs, Jubilant, Metro Brands, Indigo, Tata Motors, TVS Motors, IndiaMART, Delhivery, Havells, Crompton.

What's the bad news for insurance sector?

Insurance stocks fell between 8-12 percent on February 1 after Finance Minister Nirmala Sitharaman announced that income tax exemption from proceeds of insurance policies will be limited in certain cases.

“(A) proposal…is to limit income tax exemption from proceeds of insurance policies with very high value,” Sitharaman said. In the FY24 Budget, the government announced that income earned from all life insurance policies, excluding unit-linked insurance plans (ULIPs), with a premium of above ₹5 lakh will be taxable. This is applicable for new policies, issued post April 1, and not for the existing ones.

The government has basically taken away tax exemptions from traditional insurance plans if the annual premium is above ₹5 lakh. However, this does not apply to proceeds received on account of the death of the policyholder.

The proposal has made life insurance schemes less appealing as a tax-saving instrument, providing a higher impetus for individuals to shift to the new tax regime, which does not favour tax exemptions from investments in insurance schemes. While the new tax regime offers lower tax rates, it offers no exemptions on investments under Section 80C of the Income Tax Act.

What did it say about market-linked debentures?

The Union Budget for 2023-24 announced that the capital gains on market-linked debentures (MLDs) will now be taxed as short-term capital gains. They are currently being taxed as long-term capital gain at the rate of 10 percent without indexation.

As per the Finance Bill, a special provision for taxation of capital gains has been introduced in case of Market Linked Debentures. In the Budget 2023, Finance Minister Nirmala Sitharaman said that it has been noticed that a variety of hybrid securities that combine features of plain vanilla debt securities and exchange-traded derivatives are being issued through private placements and listed on stock exchanges. “It is seen that such securities differ from plain vanilla debt securities,” she said. Further, they give variable interests as they are linked with the performance of the market.

To tax the capital gains arising from the transfer or redemption or maturity of these securities as short-term capital gains, the government has proposed to insert a new section 50AA in the Income Tax Act. This is to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the 'Market Linked Debentures' as reduced by the cost of acquisition of the debenture and the expenditure incurred wholly or exclusively in connection with transfer or redemption of such debenture, as capital gains arising from the transfer of a short-term capital asset.

Further, it is also proposed to define the 'Market linked Debenture' as a security by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to market returns on other underlying securities or indices and include any securities classified or regulated as a Market Linked Debenture by Securities and Exchange Board of India.

This amendment will take effect from April 1, 2024.

Why did ITC and Godfrey Phillips fall?

Shares of cigarette makers ITC, Godfrey Phillips, VST Industries and NTC Industries fell in a knee-jerk reaction in intra-day deals on February 1 after Finance Minister Nirmala Sitharaman in her Budget 2023 speech announced a hike in duty on cigarettes by 16 percent.

"National Calamity Contingent Duty (NCCD) on specified cigarettes was last revised three years ago. This is proposed to be revised upwards by about 16 percent," the FM said in her Budget speech.

There had been no increase in taxes for cigarettes in the last two years. However, all cigarette makers have recovered from their fall as experts are not worried about the prospects of the company as they find the tax increase a modest one. Analysts believe cigarette companies would not find it difficult to pass on the meagre cost bump to the customers as prices have not increased much in the last two years.

“A 16 percent hike in NCCD on cigarettes in the budget is a step in the right direction as this shall lead to a nominal overall tax increase and implies stability in taxation. The increase is lower than the street’s expectations, and we expect legal cigarette players to gain share from the illegal ones,” Nuvama Institutional Equities, said in a note.

Why shares of hotel, restaurant, and tourism industries rallied?

After Nirmala Sitharaman stated in her Budget speech that the government is in 'mission mode' to promote tourism in the nation with the active participation of states, convergence of government programmes, and public-private partnerships, shares of hotel, restaurants, and toursim companies stocks rallied on Wednesday.

This came in as a huge boost for the hospitality industry, which has suffered greatly as a result of the pandemic and was the worst-hit sector during COVID-19.

Measures to promote tourism?

FM Nirmala Sitharaman in her budget speech said that every destination would be created as a complete package. Both domestic and international tourists will be the main focus of the development of the tourism industry.

With an integrated and innovative approach, at least 50 destinations will be selected through challenge mode. To improve the tourist experience, all pertinent information would be made available on an App in addition to factors like physical and virtual connectivity, tourist guides, high standards for food streets, and tourists' security.

Which hotel, restaurant, and travel companies saw the biggest gains?

Shares of Indian Hotels Company closed 8.50% higher, Lemon Tree Hotels closed 5.8% higher, Taj GVK Hotels & Resorts closed 3.46% higher, and EIH Associated Hotels closed 1.85% higher.

Initiatives to promote domestic tourism?

FM announced the "Dekho Apna Desh" initiative to promote domestic tourism as part of its efforts to boost tourism. In accordance with this plan, 50 locations across the nation will be chosen through a challenging method.

Benefits to provide travellers?

This program's main goal is to encourage travel and encourage people to learn about India's rich and diverse cultural heritage. This programme is intended for the nation's middle class citizens, and it encourages them to travel inside of India rather than abroad. Additionally, this plan increases the number of jobs available in the nation.

What happened on LTCG and STCG taxes?

The Union Budget for 2023-24 has maintained the taxes on long-term capital gains (LTCG) and short-term capital gains (STCG). The current LTCG tax rate in India is 10% without indexation and is applied on gains exceeding Rs. 1 lakh on listed equity shares held for more than a year. The STCG on equity held for less than a year is taxed at 15%.

Impact of LTCG and STCG taxes?

Any increase in LTCG and STCG rates generally is not taken positively because it leaves investors with less wealth.

Why did the Indian 10-year bond yield drop on the budget day?

The yield on the 10-year Indian government bond fell sharply to below the 7.21% mark, a drop of 07 basis points on Wednesday after investors welcomed the Budget proposal to cap the government's gross borrowings at ₹15.43 lakh crore, as opposed to the bond market's anticipation of roughly ₹16 lakh crore (bond yields and prices move inversely).

The borrowing plans outlined are intended to maintain a fiscal deficit of 5.9% of GDP, narrowing from the target of 6.4% this year.

In recent times, the RBI has turned to monetary tightening to control inflation and raised interest rates to 6.25% in its latest meeting by raising its key repo rate by 35 basis points. This is the central bank's fifth rate hike in a row.

However, the annual inflation rate decreased to 5.72% in December, which was below the RBI's tolerance range of 2-6%. Thus, analysts anticipate that the RBI will raise rates more slowly at its future meeting, which might cause the yields on 10-year bonds to drop even further.

Why did the defence stocks fall on the Budget day?

Defence-related stocks turned into investors' favourite picks in the last one year as the Indian government looked committed to reducing the import of defence products and purchasing locally produced weapons and systems.

However, on Wednesday, shares of BEML ended 9% lower at ₹1,396.05, and those of Bharat Electronics fell 4.2% to ₹90.95. Likewise, shares of Hindustan Aeronautics plummeted 7.4% to 2,364. The sharp sell-off came after the Indian government slashed the sector allocation in the FY24 budget compared to that in FY23.

For the defence sector, the budget was increased to ₹5.94 lakh crore for 2023–24 from last year's allocation of ₹5.25 lakh crore, a jump of 13%. However, the capital outlay, which is used to buy defence equipment including new weapons, aircraft, warships, and other military hardware, rose only 6.3% YoY to Rs. 1.63 lakh crore, below the market expectations.

What did the government have for steel sector?

In Budget 2023–24, the government continued with the exemption from basic customs duty on raw materials for the manufacture of CRGO steel, ferrous scrap, and nickel cathode. This would facilitate better availability of raw materials for the steel sector.

In a similar fashion, the 2.5% concessional BCD on copper scrap is also being maintained in order to guarantee the supply of raw materials for secondary copper producers, the majority of whom are in the MSME sector.

Following the announcement, shares of Jindal Steel and Power reached a new 52-week high of ₹622.8 apiece during Wednesday's trade; similarly, Jindal Stainless also jumped 7.60% to set a one-year high of ₹274 apiece. In addition, shares of Tata Steel also jumped 3.71% to an intraday high of Rs. 124.15.

"We remain positive on the Indian ferrous sector, as we believe that domestic steel companies are well-positioned to benefit from high spreads going ahead due to structural advantages in terms of the China plus one strategy," said Reliance Securities.

"The Indian steel industry’s demand is poised to grow with considerable investments expected in the construction, infrastructure, and manufacturing sectors in view of the expected economic revival over the next few years," the brokerage added.

Anything for homebuyers and real estate?

Pradhan Mantri Awas Yojana (PMAY) is a housing scheme launched by the Government of India in 2015. The scheme aims to provide affordable housing to the economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG) of society. Under PMAY, the government provides financial assistance in the form of subsidies to eligible beneficiaries for the construction or renovation of their homes.

Finance Minister Nirmala Sitharaman on Wednesday announced an increase in the outlay for the Pradhan Mantri Awas Yojana by 66% to ₹66,000 crore. This would be a key booster for affordable housing projects across the regions, which would also drive massive demand for cement and building materials.

Following the positive announcement, shares of Indian Cements, Ramco Cements, Shree Cements, and Ultratech cement rose substantially in Wednesday's session, finishing the day up 1-5%.

In addition, the capital investment outlay has been increased steeply for the third year in a row by 33% to Rs. 10 lakh crore, which turns out to be 3.3% of GDP. This will be almost three times the outlay in 2019-20. The higher capex spending is a key positive for infrastructure development firms.

“This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowding private investments, and provide a cushion against global headwinds,” said Nirmala Sitharaman Sitharaman in her budget speech.

Further, the finance minister announced a capital outlay of Rs.2.40 lakh crore for the Railways, and it has been the highest ever outlay about 9 times the outlay made in 2013-14.

Tax on income distributed by business trusts Like REITs. Now, who will get Impacted?

Real Estate Investment Trusts (REITs) are investment vehicles that own, operate, or finance income-generating real estate properties such as apartments, office buildings, shopping centres, hotels, and warehouses. They provide investors with an opportunity to invest in real estate without having to physically own the property.

Generally, Real Estate Investment Trusts make four kinds of payments to their unit holders: interest, dividends, rental income, and repayment of debt.

Currently, the first three are taxed in the hands of the unitholders or investors at the applicable income tax slab.

However, beginning on April 1, 2024, investors in real estate and infrastructure investment trusts will have to pay a higher tax rate.

"It is proposed to tax distributed income by business trusts in the hands of a unit holder, (other than dividends, interest, or rent, which are already taxable), which is currently avoided both in the hands of the unit holder as well as in the hands of the business trust," FM Nirmala Sitharaman said in her budget speech on Wednesday.

With this announcement, no income is tax-free anymore. This will impact investors who want to invest in REITs for the long term to get tax-free income.

What did the Budget have for senior citizens?

The Union Budget proposed more incentives for Senior Citizens to save more money at a better rate of interest. Finance minister Nirmala Sitharaman announced the doubling of the maximum limit under the Senior Citizen Savings Scheme (SCSS) to ₹30 lakh from ₹15 lakh. The scheme offers assured interest of 8 percent per annum. The interest is paid quarterly.

Additionally, the investment limit under the popular Post Office Monthly Income Scheme (POMIS) has been raised to ₹9 lakh from ₹4.5 lakh. In case of joint accounts held in POMIS, the investment limit has been hiked to ₹15 lakh from ₹9 lakh. The scheme pays monthly interest at the rate of 7.1 percent per annum.

Features:

Both these schemes are backed by a sovereign guarantee, there is no credit risk involved. They both have a tenure of five years from the date of investment. However, SCSS accounts can be extended for three years upon maturity.

Investments of up to ₹1.5 lakh in a financial year, in SCSS fetch a deduction under section 80C but the interest paid by both SCSS and POMIS are taxable in the hands of investors.

For SCSS, the government revises the interest rate on every quarter, which largely depends on factors such as the prevalent rates in the market, inflation level, and others. The interest rate declared during the time of investment is fixed and doesn't change throughout the maturity tenure. The minimum deposit for the scheme is ₹1,000, while the deposit quantum has been revised to ₹30 lakh in this Budget, which was ₹15 lakh before.

How has the govt tinkered with the TCS on LRS?

The Union Budget 2023 proposed to hike the Tax Collection at Source (TCS) to 20 percent from 5 percent currently on overseas tour packages and a liberalized remittance scheme (LRS) for remittance of funds out of India. This is for overseas travel other than for Education and medical purposes. This is applicable on foreign outward remittances above ₹7 lakhs. The amendments will come into effect from July 1, 2023.

Let's first understand what is LRS? The Liberalised Remittance Scheme helps citizens and investors send and invest money overseas. Remitting funds overseas to your children, family members or friends for any reason was relatively complicated and difficult as a process until the Reserve Bank of India (RBI) created Liberalised Remittance Scheme (LRS) in 2004. The scheme streamlined overseas payments and was made available for all resident individuals in India.

The Liberalised Remittance Scheme (LRS) allows Indian residents to transfer up to $250,000 abroad in a financial year. Authorised dealers, such as banks, enable such transactions between residents and their overseas dependents, using only your PAN card for verification. It can also offer foreign exchange services to Indian citizens for medical expenses or travelling. However, corporates, partnership firms, HUFs, and charitable trusts are not eligible to use the LRS.

The new proposal is unlikely to become popular among middle class and HNIs alike since this will make travelling abroad for tourism ot eductaion difficult. Many parents send money to their kids studying abroad for their daily expenses as well as education, which now will be taxed at a higher rate. also, even vacationing abroad will now become expensive, especially for the middle class. The high tax rate also pose challenges for people looking to invest in overseas stocks.

What are the personal income tax-related announcements?

Finance Minister Nirmala Sitharaman, while announcing the Budget 2023 on Wednesday, said that the new tax regime will now be the default tax regime though taxpayers can avail of the deduction and exemption benefits of the old tax regime too. This explains the newly announced income tax slabs that ring in the much-needed relief to salaried taxpayers.

Further, the government has rejigged the limit set under Section 87A of the Income Tax Act, 1961. The rebate under section 87A of the new income tax regime has gone up to ₹7 lakh.

The tax exemption limit has been enhanced to ₹25 lakh on the leave encashment amount received by non-government salaried employees. Also, taxpayers earning ₹15.5 lakh or more are eligible for a standard deduction of ₹52,500 in the new tax regime. Currently, the standard deduction is ₹50,000 in the old regime, and the maximum deduction for professional tax is ₹2,500.

The government has reduced the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime.

How do the new tax slabs compare with the old slabs?

Revised tax slabs under new tax regime:

-Income of ₹0-3 lakh: nil.

-Income above ₹3 lakh and up to ₹6 lakh: 5%

-Income of above ₹6 lakh and up to ₹9 lakh: 10%

-Income of above ₹9 lakh and up to ₹12 lakh: 15%

-Income above ₹12 lakh and up to ₹15 lakh: 20%

-Income above ₹15 lakh: 30%

Old tax slabs under new tax regime:

-Income up to ₹2.5 lakh: nil

- ₹2.5 lakh to ₹5 lakh: 5%

- ₹5 lakh to ₹7.5 lakh: 10%

- ₹7.5 lakh to ₹10 lakh: 15%

- ₹10 lakh to ₹12.5 lakh: 20%

- ₹12.5 lakh- ₹15 lakh: 25%

-Above ₹15 lakh- 30%

How should I calculate the income tax now?

As already mentioned, according to the latest tax slabs (under the new tax regime), there will be no income tax on income up to ₹3 lakh. Those earning between ₹3 lakh and ₹6 lakh will be made to pay 5 percent tax. A higher tax rate of 10 percent will be applicable on income bracket between ₹6 lakh and 9 lakh.

For instance, if your income is ₹10 lakh, the tax levied will be 5% of ₹3,00,000 ( ₹15,000) + 10 percent of ₹3,00,000 (30,000) + 15% of ₹1,00,000 (15,000) = ₹60,000.

How much does one save in taxes under new slabs vs old slabs?

Let us assume your income is ₹9 lakh.

Tax in the case of old slabs (mentioned above) of the new tax regime:

Up to ₹5 lakhs: ₹12,500 [ ₹2.5 lakhs* 5%]

Up to ₹7.5 lakhs: ₹25,000 [ ₹2.5 lakhs*10%]

Up to ₹9 lakhs: ₹22,500 [ ₹1.5 lakhs*15%]

Total tax payable would be ₹60,000

Tax in the case of new slabs (mentioned above) of the new tax regime:

Up to ₹6 lakhs: ₹15,000 [ ₹3 lakhs*5%]

Up to ₹9 lakhs: ₹30,000 [ ₹3 lakhs*10%]

Total tax liability, as per finance minister, would be ₹45,000

Hence,

Tax liability as per old tax rates = ₹60,000

Tax liability as per new tax rates = ₹45,000

Total tax saved would be = ₹15,000

Also Read | Budget 2023: Income tax saving under the latest slabs vs old slabs of new regime; check details

Does a personal tax rebate help the market?

A reduction in personal taxes improves demand and spending since consumers have more disposable income in hand.

Even though a reduction in personal tax is not as significant for the market as a reduction in LTCG tax, some of the mass-category segments, such as FMCG, capital goods and even automobiles tend to gain in case of a cut in direct taxes.

Also Read | Budget 2023: What does this budget have for retail and young investors? 10 experts share their views

What's in for gold and silver?

Gold and silver jewellery is going to be expensive as customs duty has been hiked by the government. The FM said basic customs duty on articles made from gold bars has been increase while an increase in the import duty of silver dore, bars and articles has also been announced to align them with that on gold and platinum.

Besides, the government said there won't be any capital gain tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa.

What got cheaper and what got expensive?

Mobile phones and TV sets manufactured in India are set to become cheaper with cuts in Basic Customs Duty (BCD) on import of their components but smokers would have to pay more with increased taxes.

Fully imported cars, including EVs, and those assembled in India with imported parts will also become costlier with a hike in customs duty.

A list of imported items that will become costlier:

*Cigarettes

*Kitchen chimney

*Imported bicycles and toys

*Fully imported cars and Electric Vehicles

*Imitation jewellery

*Compounded rubber

* Silver dores

*Naphtha

Goods that will become cheaper:

* Domestically-manufactured TV sets

* Shrimp feed

* Fish lipid oil used in manufacturing aquatic feed

* Seeds for lab-grown diamonds

* Capital good

*Machinery for manufacturing lithium ion cell to be used in electric vehicles.

What were all the major announcements for the youth?

PMKVY 4.0- To further empower our youth and help the ‘Amrit Peedhi’ realize their dreams, the fourth phase of Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has been announced to give a push to skilling in the country. Announced in the Union Budget 2023, this scheme will be launched in the next three years to skill lakhs of youth.

Skill India digital platform- FM Sitharaman announced that 30 Skill India International Centres will be set up across different states, to help the youth get international opportunities. Moreover, a unified "Skill India" platform will be launched to enable demand-based formal skilling, linking with employers (including MSMEs) and facilitating access to entrepreneurial schemes.

National Apprenticeship Scheme- The government announced a pan-India national apprenticeship scheme to empower youth from rural areas and economically disadvantaged families with both soft and hard skills. To provide support to 47 lakh youths in 3 years, a Direct Benefit Transfer scheme under the National Apprenticeship Scheme will be rolled out by FM Nirmala Sitharaman.

Anything on education and employment generation?

Undoubtedly, the Union Budget 2023 is focused on developing a knowledge- and technology-driven economy that will move India closer to Amrit Kaal.

Finance Minister Nirmala Sitharaman made major announcements for the education sector during her budget speech, sending out positive signals regarding the government’s plans to improve the education system in the country.

District Institutes of Education and Training will be set up to facilitate a re-formulation of teachers’ training through innovative pedagogy, curriculum transaction, continuous professional development, dipstick surveys, and implementation of information and communication technology (ICT).

Additionally, the government announced that it will provide stipend support to 4.7 million youth in the next three years through a direct benefit transfer initiated under the pan-India National Apprenticeship Promotion Scheme.

The budget also proposed the setting up of 30 Skill India International Centres across different states and the launch of a unified Skill India Digital platform for enabling demand-driven formal skilling.

Further, 38,800 teachers and support staff will be recruited for the 740 Eklavya Model Residential Schools to serve 350,000 tribal students over the next three years. Moreover, national digital libraries for children and teenagers and physical libraries at the panchayat and ward levels will be established.

An increase of 8% in the budget allocation for Higher Education was also announced. Union Minister for Education, Dharmendra Pradhan claimed that this has been the highest-ever allocation of ₹1,12,899 crore for the education sector in the Union Budget 2023-24.

However, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) budget has been reduced by 21.66 percent for 2023–2024, drawing concern from some quarters.

What does the Budget mean for sports?

The Ministry of Youth Affairs and Sports has announced the highest-ever budget allocation for 2023-2024 at INR 3389.56 crores, an increase of INR 724.72 crores compared to the revised 2022-2023 budget.

Khelo India, a scheme that works with athletes and nurtures them at the ground level, received an allocation of INR 1045 crores while Assistance to National Sports Federation increased by INR 45 cr to be at INR 325 cr. Sports Authority of India too saw an increase in its allocation to INR 785.52 crores. The Incentive to Sports Persons has received a budget allocation of 45.00 crores, a decrease of 10.00 crores from the previous year.

Commonwealth Games also received an allocation of INR 30 cr. Other autonomous bodies like Nehru Yuva Kendra Sangathan and Rajiv Gandhi National Institute of Youth Development, which also includes SAI, witnessed a jump of over INR 100 cr to stand at INR 1435.58 cr.

The government's move to invest in youth sports is a strong message on the importance of sports. This will allow financial assistance to the state governments for developing sports infrastructure and facilities to encourage participation at the grassroots level. It will also fuel the sports league talent supply chain, creating a vibrant sports culture in India. With this budget allocation, India is surely taking steps towards becoming a multi-sport-playing nation.

What were the key takeaways for startups?

Among the major announcements, FM stated that the startups incorporated up till March 31, 2024 will be eligible for income tax benefits. This replaces the earlier date of March 2023 which was set in last year’s Budget.

Additionally, the Finance Minister announced tax incentives for startups in the country. Startups incorporated after March 31, 2016, will be allowed to carry forward losses incurred during a certain period to the next financial year. This will help them set off these losses against income.

To be eligible for the tax holiday, the startup’s turnover should not exceed ₹100 crore in any of the previous financial years. The move is expected to provide a much-needed boost to the burgeoning startup sector in India. It will also encourage more people to venture into entrepreneurship and create new business opportunities.

Furthermore, the government also plans to build a digital public infrastructure for the agriculture sector. To further promote the growth of such startups, an agriculture accelerator fund will also be launched by the government. The fund will focus on supporting young entrepreneurs in rural areas by equipping them with modern tools and technologies.

What has the Budget got for artificial intelligence?

The Government of India has announced the setting up of three centres of excellence for Artificial Intelligence (AI) at leading educational institutions in the country. The move is part of its Digital India initiative and aims to create a strong AI ecosystem within the country.

Finance Minister Nirmala Sitharaman said that the AI centres will be set up in collaboration with top educational institutions and relevant industry leaders, and focus on researching and developing practical AI applications in the fields of agriculture, health, and sustainable cities.

The Budget has also allocated funds for training in artificial intelligence (AI) and related fields under the Pradhan Mantri Kaushal Vikas Yojana. The scheme will cover a wide range of courses including Industry 4.0 technologies such as coding, AI, robotics, IoT, mechatronics, 3D printing, drones and soft skills.

Apart from this, the government also plans to set up 100 labs for the development of 5G apps in leading engineering institutes. This is expected to promote made-in-India apps, which would enhance India’s presence in the global tech market.

What are the hits and misses?

Hits:

Income Tax Rate & Slab Changes

1. New tax regime slabs are reduced, and rates are improved.

2. Standard deduction of Rs. 52,500 under the new tax regime for income > ₹15.5 L.

3. The highest surcharge is down from 37% to 25%.

4. Tax-free leave encashment limit at retirement for non-govt. salaried employees increased from ₹3L to ₹25 L.

Relax, senior citizens - limits up!

5. Senior Citizen Saving Scheme limit increased from ₹15 L to ₹30 L per person.

6. Senior Citizen's Monthly Income Scheme limits increased.

- For individuals from ₹4.5 L to ₹9 L

- For joint accounts from ₹9 L to ₹15 L

Make it simpler

7. Easier KYC and centralized address updates with digital locker and Aadhaar.

8. Tax return form to be simplified.

9. IT scrutiny would be more selective.

10. The average time to process refunds is down to 16 days from 3 months.

For upper middle class & rich:

11. At the highest slab, the effective tax rate is down from 42.7% to 39%.

Misses on PF front:

High-end insurance policies to be taxed

No changes in capital gains definition and taxes

Income from REITs to be taxable from now

Also Read | From retail investors to Gen Z: Who Gained and Who Lost From India’s Federal Budget