Budget 2023-24: Where does the rupee come from, and where does it go?

Budget 2023: The largest share of the Centre's expenditure goes towards paying the interest on borrowings

Finance Minister Nirmala Sitharaman announced the Union Budget for 2023-24 on Wednesday. This was Sitharaman's fifth consecutive Budget and the last full Budget in this government's tenure. One of the major announcements FM Sitharaman made was around the new income tax regime. The tax exemption limit has been raised from Rs 5 lakh per annum to Rs 7 lakh. Also, the benefits of standard deductions have been extended to the salaried class and pensioners. 

This is likely to have a positive impact on the income of the Indians.

"The slab rates have been tweaked which provides relief to salary taxpayers from the administrative inconvenience caused by claiming deductions and exemptions under the old regime. Now a person earning an income of Rs 15,00,000 will prefer the simplified regime if his overall exemptions and deductions including standard deduction are lower than Rs 4,08,300. The government has now tried to make the new regime a simplified regime," said Nitin Baijal, director at Deloitte India.

The highest surcharge rate on income above Rs 5 crore has been reduced from 37 per cent to Rs 25 per cent.

Also, the tax on capital gains can be avoided by investing the proceeds into residential property. This has been put at Rs 10 crore. This is going to impact ultra High Net Individuals.

According to Manish P Hingar, founder at Fintoo, "It is going to impact the ultra HNI people as they need to pay long-term capital gain on the sale of house property with big ticket size but it will be not a major setback as you can still take a deduction up to Rs 10 crores."

Among other announcements was a 33.4 per cent jump in capital expenditure, a higher allocation of Rs 2.4 trillion to Railways and a focus on Artificial Intelligence, among other things.

However, as a citizen, one is always curious to know where the Centre gets its money from and where it spends it.

Budget 2023: Where does the rupee come from?

According to the Budget, the highest share of the Centre's income comes from borrowings and other liabilities. They account for 34 per cent of the total income. It is followed by GST and other taxes, which account for 17 per cent of the total income.

Next, Income Tax and Corporation Tax make up 15 per cent of the total income. It is followed by Union excise duty at 7 per cent.

Six per cent of the Centre's income comprises non-tax receipts like rent, penalties and fines. Further, customs and non-debt capital receipts account for 4 and 2 per cent of the total income.

Budget 2023: Where does the rupee go?

The largest share of the Centre's expenditure goes towards paying the interest on borrowings. According to the Budget, they account for one-fifth or 20 per cent of the total expenditure. It is followed by the money given to the states as their share of taxes and duties. It accounts for 18 per cent of the total spending.

The allocations towards the central sector and centrally sponsored schemes are the next two big expenses accounting for 17 and 9 per cent of the total expenditure. Finance Commission and other transfers make up 9 per cent and Defence 8 per cent in the total expense. They are followed by Subsidies and Pensions at 7 and 4 per cent, respectively.

How is it different from last year's Budget?

On the income side, the collections from GST and non-tax receipts have gone up by one percentage point, while from borrowings and customs have fallen by one percentage point, respectively.

On the expenditure side, the spending towards the state's share of taxes and duties has gone up and towards subsidies has gone down by one percentage point each.