On Wednesday, 1 February 2023, the Hon'ble Finance Minister, Nirmala Sitharaman, presented Union Budget 2023 in the Lok Sabha.
We bring you a detailed analysis on tax and regulatory amendments announced by the Hon'ble Finance Minister at her budget speech in respect of banking and financial services:
- Revamping of the credit guarantee scheme for MSMEs through introduction of INR 9,000 crores in the corpus enabling additional collateral-free guaranteed credit of 2 lakh crore;
- Setting-up of a national financial information registry to serve as the central repository of financial and ancillary information;
- To facilitate optimum regulation in the financial sector, public consultation, as necessary, will be brought to the process of regulation-making and issuing subsidiary directions;
- Financial sector regulators will carry out a comprehensive review of the existing regulations. Moreover, time limits to decide the applications under various regulations will also be laid down;
- Single window clearance approach for registration by IFSCA along with introduction of further amendments/ policies with a continued objective of promoting the IFSC;
- Given the consistent growth of digital payments in India, the fiscal support for digital public infrastructure will continue in FY 2023-24; and
- Introduction of additional measures to improve governance and investor protection in the banking sector and ensure capacity building in the securities market.
From a procedural perspective on direct taxes, the Budget proposals aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens.
From an indirect tax standpoint, the proposals aim to promote exports, boost domestic manufacturing, enhance domestic value addition, encourage green energy and mobility. Changes have been proposed keeping in mind that fewer tax rates helps in reducing compliance burden and improving tax administration.
