The Impact of Budget 2023 on Businesses

Ganesh S E -

The Budget for 2023-2024 had a plethora of schemes and changes to better the quality of life while also focusing on the nation’s growth. It has focused on seven priorities aka the Saptarishi. It includes Inclusive development, Reaching the last mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power, and Financial Sector.

This article will focus only on the key business-related aspects of the 2023-24 budget. Let’s get started without mincing any more words.

Scheme for Traditional Artisans and Craftspeople

The PM VIshwakarma KAushal Samman (PM VIKAS) has been conceptualized for traditional artisans and craftspeople. This scheme aims to raise the quality, reach, and scale of their products while also integrating with the MSME chain. This is to be achieved with financial support, skill training, knowledge transfer, brand promotion, link building, and security provided by the government.

Agriculture Accelerator Fund

A new fund will be set up to encourage agricultural startups by young entrepreneurs in rural places. This aims to facilitate innovative and affordable solutions for the problems faced by farmers and bring in new technologies to increase productivity and ease their lives.

Scheme for the Fishing Sector

A ₹6,000 crore sub-scheme of PM Matsya Sampada Yojana is to be launched to assist the activities of fishermen, fish vendors, and other related micro and small enterprises.

Investment in Logistics

A huge amount of ₹75,000 Crores is being injected into the transport sector. This is to start 100 critical transport infrastructure projects on priority to increase connectivity for coal, steel, fertilizer, and food grain sectors. This investment in logistics can be a game changer for businesses that rely on transport infrastructure.

Reduced Compliance for Businesses

To boost our economy, plenty of the chains binding businesses have been loosened. More than 39,000 compliances have been reduced,  3,400 legal provisions decriminalized, and 42 central acts are amended with the newly introduced Jan Viswas bill.

Access to Data

Startups and academia will be allowed access to Anonymized data to assist them with their research under the new Data Governance Policy.

PAN: The New Business identifier

For Establishments requiring to have a PAN, PAN is stated to be used as a common identifier for all digital systems of specified government agencies.

Unified Filing Process

A Unified Filing Process will be set up, eliminating the need for the submission of the same information to different government agencies. Instead, the filer will have a choice to select the agencies they will be sharing their information with.

Relief for MSMEs

The government is set to provide relief for MSMEs by returning 95 percent of the forfeited amount related to bid or performance security in case they failed to execute contracts during the Covid period.

Digilocker Document Expansion

To enable more Fintech service innovations the range of documents available for individuals will be expanded.

Digilocker for Entities

An Entity Digilocker will be set up for use by MSMEs, businesses, and charitable trusts for sharing and storing documents.

Incentives for Sustainability

Under the Environment Protection Act, a green credit program will be started to incentivize and assist actions promoting sustainability by companies.

A Push for Coastal Shipping

Coastal Shipping will be promoted both for passengers and freight. This should provide opportunities for businesses that rely on shipping goods through the sea route.

Credit Guarantee for MSMEs

With the infusion of ₹9,000 crores the revamped credit guarantee scheme for MSMEs will take effect from 1st April 2023. This scheme enables an additional collateral-free credit of ₹2 lakh crore. Additionally, there’s a 1 percent reduction in the cost of credit.

Here’s a list of the change in tax rates for goods and items that affect some businesses.

Indirect Taxes

  • Mobile Phones: Relief in custom duty on certain parts like a camera lens.
  • TV: The Basic custom duty on open cells of TV panels is to be reduced to 2.5 percent.
  • Electric Kitchen Chimney: Basic customs duty increased from 7.5 percent to 15 percent, and the heat coil for the same is to be reduced to 15 percent from 20 percent.
  • Denatured Alcohol: Basic customs duty exempted.
  • Acid grade Fluorspar: Customs duty reduced to 2.5 percent from 5 percent.
  • Crude Glycerin: Basic customs duty proposed to be reduced to 2.5 percent from 7.5 percent for use in manufacturing epichlorohydrin.
  • Shrimp Inputs: Duty reduced on key inputs for shrimp feed production.
  • Lab-Grown Diamonds: Reduction of basic customs duties on seeds for manufacturing diamonds.
  • Gold and Platinum: Duties increased on gold and platinum articles.
  • Silver: Import duty increased on silver dore, bars, and articles.
  • Steel Sector: Exemption on raw materials for the manufacture of CRGO Steel, ferrous scrap, and nickel cathode from basic customs duty is being continued.
  • Copper Scrap: Concessional BCD of 2.5 percent is being continued on copper scrap.
  • Compounded Rubber: Basic customs duty increased to 25 percent (or Rs.30 per kg whoever is lower) from 10 percent.
  • Automobiles: Duties increased to 35 percent from 30 percent for vehicles in semi-knocked down form. For some vehicles in the completely built unit (CBU) form the duties are raised to 70 percent from 60 percent.
  • Bicycles: Duties raised to 35 percent from 30 percent.
  • Toys: Duties for toys and their parts (non-electronic) raised to 70 percent from 60 percent.
  • Cigarettes: National Calamity Contingent Duty (NCCD) raised by 16 percent.

Direct Taxes

  • MSMEs: Microenterprises with turnover up to ₹2 crores can use the benefits of presumptive taxation. And taxpayers with receipts no more than 5 percent are provided with enhanced limits of ₹3 crores. Additionally, to support MSMEs with timely receipt of payments, they are to be allowed a deduction for expenditure incurred on payments made to them only when payment is actually made.
  • Start-ups: The date of incorporation for income tax benefits is to be extended from 31 March 2023 to 31 March 2024. A proposal has been made to carry forward the losses of shareholding of start-ups from seven to ten years of incorporation.

For additional information on new schemes and detailed rates refer to the official budget document from the Government.