Union Budget 2023-24: Key highlights for IT and telecom sector

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Union Budget 2023

India’s robust economic performance is expected to continue, with the country projected to grow by up to 6.8% in FY2023-24 according to this year’s Economic Survey of India. India is optimistic about the coming fiscal year, projecting growth in GDP higher than that of the IMF’s expectations. As global economic and political events continue to unfold, it remains to be seen just what this improvement can bring to India’s economy.  

On February 1st, India’s Finance Minister Nirmala Sitharaman unveiled the much-anticipated Union Budget for 2023-24. The government’s latest budget is aimed at significantly propelling the economy, with a focus on cutting costs and promoting sustainability. Supporting green growth to achieve net zero emissions targets will help foster export-driven production while upgrading infrastructure for 5G services offers new opportunities in research and development. Upskilling initiatives provide further career prospects, whilst relief measures have been introduced for middle-class taxpayers – offering an increase in overall quality of life! 

What does the Union Budget 2023-24 have in store for the IT and telecommunication sector? 

  • To bolster development projects and provide an impetus to infrastructure growth, the government is making a sizeable outlay of INR 10 trillion. Additionally, it will support states through grants-in-aid as well as set up a finance secretariat for private investments in this sector.  
  • As part of data governance, the Government will launch National Data Governance Policy. It will also facilitate setting up data embassies in GIFT IFSC. 
  • To leverage Artificial Intelligence for the benefit of India, three Centers of Excellence are being established in some top-notch educational institutions. Envisioned under “Make AI in India and Make AI work for India”, the Government wants leading industry players to research cutting-edge applications and devise scalable solutions in agriculture, health care & sustainable cities. 
  • The budget proposes a revolutionary step forward of setting up 100 labs in engineering institutions to develop applications utilizing the benefits of 5G services. From smart classrooms, precision farming, and intelligent transport systems, to healthcare applications, these new opportunities will open doors for businesses while creating more employment options across numerous fields. 

  • The government has created a new scheme to help MSMEs get access to credit. In the MSME budget, the government has announced that deductions for expenditure incurred on payments made to MSMEs will be allowed only when payment is made, to support MSMEs in timely receipt of payment. 

Other key highlights of the budget 

  • As a big boost to agriculture, the agricultural credit target will be increased to Rs 20 lakh crore, with a focus on animal husbandry, dairy, and fisheries. A new sub-scheme will be launched with a targeted investment of Rs 6,000 crore to help fishermen, fish vendors, and MSMEs. 
  • 157 new nursing colleges will be co-located with the existing 157 medical institutions. Both public and private college faculty, as well as R&D teams from the private sector, can access ICMR labs for research.  To encourage young minds to explore the world of reading, a National Digital Library will also be set up that can cater to diverse needs across languages and devices. 
  • The finance minister announced a whopping 33% boost to capital investment outlay, totaling Rs 10 lakh crore – 3.3% of GDP! To further spur economic growth and job creation in India, the government has also extended its provision for 50-year interest-free loans to state governments by another year. 
  • Custom duty rates on most non-textile and agricultural goods have been reduced from 21% to 13%. Furthermore, she announced that concessions for lithium-ion cell batteries will be extended by one more year. 
  • The finance minister underscored the importance of MSMEs in powering India’s economic growth, announcing that micro enterprises with an annual turnover of up to Rs 2 crore and certain professionals earning a maximum revenue of Rs 50 lakh can harness the benefits of presumptive taxation. 
  • There will be no change in corporate tax and capital gains tax rates according to the Union Budget 2023-24. The basic exemption limit will be increased to INR 3,00,000 and the highest surcharge rate will be reduced from 37% to 25% for individuals and certain taxpayers under the new tax regime. The tax rebate will be increased up to 100% of the tax for resident individuals with income of up to INR 7,00,000. Salaried class and pensioners can also enjoy the benefit of the standard deduction as per the new tax regime. 

India’s Finance Minister Nirmala Sitharaman highlighted the government’s commitment to boosting economic growth, investing in infrastructure and manufacturing, and creating jobs during her budget speech. The focus of these efforts is clear: ensure a bright future for India by providing opportunities that encourage meaningful progress! 

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