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HIGHLIGHTS OF BUDGET 2023
Finance Minister Nirmala Sitharaman presented the Union Budget 2023-2024 on February 1 which had a greater emphasis on the rural sector, social sector schemes, infrastructure creation, and the middle class.
INCOME TAX:
- In a relief to taxpayers, the FM proposed to change the tax structure in the new personal income tax regime by reducing the number of slabs to 5 and increasing the tax exemption limit to ₹3 lakh.
- New income tax slabs have been made as a default tax regime in Budget 2023, though, the old one has not been abolished. Therefore, taxpayers now have two options.
- Hence, the new tax rates as per New Tax Regime are:
- Income slab of ₹3 lakh: No tax levied
- Income of ₹3 lakh to ₹6 lakh: 5% tax rate
- Income of ₹6 lakh to ₹9 lakh: 10% tax rate
- Income of ₹9 lakh to ₹12 lakh: 15% tax rate
- Income of ₹12 lakh to ₹15 lakh: 20% tax rate
- Above ₹15 lakh income: 30%
- Whereas there are no changes In income Tax Slab rates as per old regime.
- Additionally, the FM has proposed to reduce the surcharge rate from 37% to 25% on the highest tax rate in the country of 42.74% — which is among the highest in the world. With the reduction in the surcharge rate, the maximum rate would be 39%.
- Benefit of the standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lahks or more will thus stand to benefit by ₹52,500.
- Rebate – Up to Rs. 7 lakhs do not pay any income tax in new tax regimes
- Leave Encashment on Retirement – tax exemption limit increased from Rs. 3 Lacs to Rs. 25 Lacs
Other Taxes:
- Tax exemption on capital goods and lithium batteries
- Higher TDS limit of Rs 3 crore for cooperatives on cash withdrawals
- Manufacturing Co-operative society – 15% concessional tax rate for new cooperative societies formed after 1st Apr 2023 and commences manufacturing/production before 31 Mar 2024.
- Business Trusts – It is proposed to tax distributed income by business trusts in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of unit holder as well as in the hands of business trust.
- Life Insurance Policies (other than ULIP) – Income will be exempt only from those policies issued after 1st April 2023 with aggregate premium up to Rs. 5 Lakh
- Presumptive taxation Scheme – For Businesses increased to Rs. 3 Cr (from Rs. 2 Cr.) and For Specified Professionals increased to Rs. 75 Lacs (from Rs. 50 Lacs) where cash is less than 5%.
- Tax on Capital Gain – Investment of proceeds in to Residential property is capped at Rs. 10 Crore
- Relief to start-ups in carrying forward and setting off of losses – 51% shareholding is relaxed and carry forward timeline increased to 10 years from 7 years
- Startup Eligible for exemption – Date of incorporation extended upto 1st April 2024.
- Return filed against sec 148 will not be considered as return filed in sec 139
- SEZ need to file return before 139 (1) for exemption u/s 10AA
- Sec 48 not include deduction claim u/s 24(b) and chapter VI-A
- TCS rate increased to be 20 per cent from 5 per cent currently on overseas tour packages and a liberalized remittance scheme for remittance of funds out of India.
- 20 per cent TCS will be applicable in cases where funds in excess of Rs 7 lakh are sent out of India under the Liberalised Remittance Scheme of the RBI.
AREAS OF FOCUS IN THE BUDGET
Savings:
- Monthly Income Scheme limit doubled to Rs 9 lakh, Rs 15 lakh for joint accounts.
- Senior Citizen Savings Scheme limit doubled to Rs 30 lakh
- One time new small saving scheme Mahila Samman Savings Certificate to be made available for two years up to 2025; scheme to allow maximum deposit of up to Rs 2 lakh, yield 7.5 per cent interest
Infrastructure:
- Record capital outlay of Rs 2.4 lakh crore for Railways
- Enhanced capex of Rs 10 lakh crore for infra development, 3.3 per cent of GDP
- PM Awas affordable housing scheme outlay hiked 66 per cent to Rs 79,000 crore
- 50 new airports and heliports to be made
- Increased capital outlay for infra to crowd in private investment
- Rs 10,000 crore for urban infra fund every year
- Rs 75,000 crore for 100 transport infra projects
Agriculture
- Agri accelerator fund will be set up to encourage agri startups in rural regions
- Agriculture credit target raised to Rs 20 lakh crore
- One crore farmers to be facilitated to adopt natural farming
Defence
- Rs 5.94 lakh crore allocated to defence ministry vs previous year’s Rs 5.25 lakh crore
- Rs 1.62 lakh crore set aside for capex towards areas such as purchase of new weapons, aircraft, warships, other military hardware
Others:
- Revamped MSME credit guarantee scheme with infusion of Rs 9,000 crore, to be rolled out on April 1.
- With the objective of promoting timely payments to MSMEs, proposed to insert a new clause (h) in section 43B to provide that any sum payable by the assessee to a MSME shall be allowed as deduction only on actual payment.
- Three AI centres of excellence to be set up
- KYC procedure to be simplified further; PAN to be made common business identifier
- Agnipath Scheme 2022 – The Payment Received by Agniveer is exempt from tax.
- Gold to Electronic Gold Receipt – Conversion from Physical Gold to electronic Gold and vice versa is not to be treated as transfer and not to attract any Capital Gain
- Incentives to IFSC – Relocation of Funds to IFSC has certain tax exemption. The deadline for relocation is extended till 31st Mar 2025.
- GST return or annual return is not allowed to be filed after 3 years from due date of return
What becomes cheaper & what gets costlier?
- Mobiles, camera lenses to become cheaper
- Gold, silver, diamonds, cigarettes, imported rubber to get more expensive
- Fully imported luxury cars and EVs to cost more; custom duty raised by 1,000 bps to 70 per cent
- Concessional basic customs duty of 2.5 per cent to continue on copper scrap
Author:-
CA Rishabh Jain ( Principal Partner )
Chartered Accountant (FCA), LLB, B.com
Expert Domain- Management Consultancy, Internal Audit, Due Diligence & Forensic Audit.
