Budget 2023 Impact On Personal Tax, Automobiles, Railway And More: IDBI Capital Analysis

IDBI Capital Report

Personal Tax - New tax slabs to benefit by Rs 39,000

Measure announced:

• Rebate limit under the new tax regime has been increased from Rs 5 lakhs to Rs 7 lakhs.

• Previously introduced new tax regime had 6 tax slabs beginning from Rs 2,50,000. Tax structure has now been changed with reduction of number of slabs to 5 beginning from Rs 3,00,000. (New tax slabs are given below).

• Highest surcharge rate has been changed from 37% to 25%. Thus leading to a reduction in the maximum tax rate from 42.74% to 39%.

Impact and our view:

• Due to the revision in the rebate threshold limit, assesses who choose to calculate tax liability under the new regime will not have any tax liability if their income does not exceed Rs 7 lakhs. This limit under the old regime has been retained at Rs 5 lakhs.

• On comparing the older version of new tax regime and newer version of new tax regime for Rs 15,00,000, newer version provides a benefit of Rs 39,000 (including cess).

Automobile - The further push towards electrification

Measure announced:

• There were a slew of measures announced by the minister, which include indirect tax customs duty removal on EV battery manufacturing, scrapping old vehicles, focus on hydrogen fuel, reduction in basic customs on other than agri and textile from 21% to 13%, the rebate limit on personal income tax has been increased from Rs 5 lakh per annum to Rs 7 lakh pa.

Impact and our view:

• These would boost green mobility and the eclectic vehicle sector in the country, auto sales will increase on the back of increase in disposable income with salaried consumers may give further boost to demand for personal vehicles and scraping old vehicle will create more demand for new vehicles.

Railway - Highest ever capital outlay

Measure announced:

• For FY24E, railway physical target (in km) for new lines is up by 200% compared to FY23RE, doubling of lines is up 27% and physical target for wagons is up by 24%.

• Total Railway capital expenditure is increased by 15% (versus FY22RE) to Rs 2.9 trillion. Baring rolling stocks, electrification projects and doubling of lines, all other railway component has seen double digit growth in capex outlay.

• In terms of public enterprises, National High Speed Rail has outlay increased by 30% in FY24BE over FY23RE.

Impact and our view:

• Increase in the capital expenditure is positive for the railway sector. We understand physical outlay increasing for new lines, doubling of lines, track renewals and wagons augers well for projects like Vande Bharat express, Ahmedabad Mumbai bullet train project.

• Metro allocation is up (in National High speed) augurs well for Larsen and Toubro Ltd.

Click on the attachment to read the full impact of budget 2023 on various sectors:

More Research Reports On Budget 2023 Reviews, Highlights

• Budget 2023 Review - Keep The Engine Chugging Along: Dolat Capital

• Budget 2023 Review - Accelerating Capex To Retool Economy: ICICI Direct

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