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The union finance minister Nirmala Sitharaman has announced the union budget, which unveiled one of its most significant leaps in capital spending in the past decade, and said the economic deficit would drop next year. The overall spending plan for FY 23-24 will primarily focus on providing a robust growth impetus by boosting employment, facilitating ample opportunity for citizens, and stabilizing the macro economy.
Being the first budget of the "Amrit Kaal," it adopted "seven priorities" or Saptrishi - inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and financial sector. With a focus on the growth and development of the nation, here's what the 2023-24 union budget looks like:
The union budget has proposed several measures to provide relief for MSMEs:
Revamped credit guarantee scheme for MSMEs: The scheme will be effective from April 1, 2023, through the input of Rs 9,000 crore in the corpus, enabling additional collateral-free credit of Rs 2 lakh crore to MSMEs.
Enhanced limits for MSMEs: The limits for micro-enterprises and professionals have been improved in the budget 2023 to provide benefits of presumptive taxation and 95% of the receipts to be non-cash.
Vivad Se Vishwas I – Relief for MSMEs: To provide relief to the MSME sector, the FM has proposed that in cases of failure to accomplish contracts during the Covid period, 95% of the forfeited amount pertaining to bid or performance security will be returned to the MSME entity by the government and government undertakings.
Vivad Se Vishwas II – Settling contractual disputes: In order to settle contractual conflicts of government and its undertakings, wherein the arbitral award is challenged in a court, the government will introduce a voluntary settlement scheme with standardized terms. This will be executed by offering graded settlement terms depending on the pendency level of the dispute.
MSMEs and Professionals: The advantage of presumptive taxation is available to small businesses with a turnover of up to Rs 2 crore and certain professionals with a turnover of up to Rs 50 lakh. Taxpayers whose cash receipts do not exceed 5% would be eligible for increased limits of Rs 3 crore and Rs 75 lakh. In addition, the Finance Minister proposed allowing a deduction for expenses incurred on payments made to MSMEs only when the payment is actually made to assist them in receiving payments on time.
Digilocker- One-stop KYC maintenance system: A risk-based approach will simplify the KYC process by using the Digilocker service and Aadhaar as the foundational identity - a one-stop solution for identity updates will be established. PAN will serve as a standard for identifying all digital systems. Enterprise-level Digilockers for MSMEs trusts and other entities are to be introduced.
Tax benefits for startups: Until March 2024, the government proposed providing income tax benefits to startups. Additionally, the FM has stated that the government intends to extend the benefit of carrying forward losses for startups for a period of 10 years. In her speech, the FM said, "I propose moving the deadline for startups to incorporate to receive income tax benefits from March 31, 2023, to March 31, 2024." She further announced to provide the benefit of carrying forward losses on alteration of shareholding of startups from 7 to 10 years of incorporation.
Here are some of the key measures announced for taxpayers:
Tax relief for income class: The union budget also tapped on the most-awaited announcement of raising the income level to which no income tax is payable to Rs 7 lakh a year from 2023-24, which was Rs 5 lakh earlier. However, this change only applies to taxpayers who choose the New Tax Regime.
Default income tax regime: The budget also announced that the new tax regime would be the default one; however, individuals can opt for the old tax regime.
Surcharge rate reduced: The government has proposed to lower the highest surcharge rate from 37% to 25% under the new tax regime
Revised tax slabs under the new tax regime: As per the new IT regime, here's the revised tax slab:
ITR processing time receded: The union budget also announced that the income tax return processing period had been reduced by 16 days. Additionally, the government has introduced new Income Tax return (ITR) forms for faster and easier filing of returns.
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