India Budget 2023: An overview of important tax proposals

DIRECT TAX RELATED AMENDMENTS

1. Proviso to Section 87A added to provide following benefits to individual residents w.e.f. 01.04.2024:
• 100% tax rebate for total income upto Rs. 7 Lakhs under New Tax Regime. 
• For assessees with total income exceeding 7 Lakhs, instead of 100% tax rebate, Marginal Relief will be provided under New Tax Regime.
2. Basic exemption limit under New Tax Regime increased from earlier Rs. 2.5 lakhs to Rs. 3 Lakhs 
3. Changes in tax slabs under New Tax Regime as under:
   

   Total Income	Tax Rates
   Upto Rs. 3 Lakhs	Nil
   Above Rs. 3 Lakhs upto Rs. 6 Lakhs	5%
   Above Rs. 6 Lakhs upto Rs. 9 Lakhs	10%
   Above Rs. 9 Lakhs upto Rs. 12 Lakhs	15%
   Above Rs. 12 Lakhs upto Rs. 15 Lakhs	20%
   Above Rs. 15 Lakhs	30%

   
   
4. Salaried/Pensioners can now claim benefit of Standard Deduction of Rs. 50,000/- under New Tax Regime
5. Family Pensioners can now claim benefit of deduction u/s 57 under New Tax Regime
6. Amount paid/deposited in Agniveer Corpus Fund u/s 80CCH will be allowed as deduction under New Tax Regime.
7. Rate of Surcharge under New Tax Regime for income exceeding Rs. 5 Crore reduced from 37% to 25%
8. New Tax Regime will be the default tax regime from AY 2024-25. Taxpayer with no business/profession income can opt for old tax regime every year, as per his discretion. However taxpayers with business/profession income will get the option to opt out of New Tax Regime only once. Once opted out of New Tax Regime they will have the option to opt in to the New Tax Regime only once.
9. Exemption on life insurance maturity proceeds tweaked. Maturity value of insurance policies issued w.e.f 01.04.2023 and having aggregate yearly premium above Rs. 5 Lakhs will be taxable under the head income from other sources. Premiums paid shall be allowed as deduction if the same was not claimed as deduction previously. However, if maturity proceeds are received in the event of death of policy holder the said proceeds will remain exempted from taxation.
10. Tax exemption limit increased from Rs. 3 Lakhs to Rs. 25 Lakhs in case of leave encashment received on retirement by non-government salaried employees
11. Presumptive taxation threshold limit where cash receipts do not exceed 5%:
• For Professionals: Limit of Gross Receipts increased from Rs. 50 Lakhs to Rs. 75 Lakhs
• For Others: Limit of Turnover increased from Rs. 2 Crore to Rs. 3 Crore
12. Deduction w.r.t to cost of newly purchased residential property u/s 54 or u/s 54F capped to Rs. 10 Crore. Accordingly Capital Gains Account Scheme deposit also capped to maximum Rs. 10 Crore.
13. Cost of acquisition or cost of improvement for computing capital gains shall not include amount of interest paid on home loan already claimed as deduction under the head income from house property.
14. U/s 155(20) Assessee can now claim TDS credit where income was disclosed on accrual basis in a previous year while TDS deducted by deductor in subsequent financial year, by filing an application to AO within 2 years from the year in which TDS was deducted. 
15. New section 194BA inserted to provide for TDS @ 30% on net winnings from online games.
16. W.e.f 01.07.2023 TCS @ 20% applicable without any threshold limit on overseas tour package and remittances under LRS except for the purposes of education or medical treatment.
17. Amendment to Section 194B and 194BB of the act to provide that deduction of tax under these sections shall be on the amount or aggregate of the amounts exceeding Rs. 10,000/- per financial year instead of earlier threshold of Rs. 10,000/- per transaction.
18. New manufacturing cooperative society incorporated on or after 01.04.2023, commencing manufacturing or production on or before 31.03.2024 and not availing any specified incentive or deduction may pay tax at concessional rate of 15%. Surcharge would be levied at 10% on such tax.
19. Last date for incorporation of startup extended till 31.03.2024 to be eligible for income tax benefits. Eligible startups u/s 79 were previously allowed to carry forward losses incurred during initial 7 years. The said period of 7 years has now been extended to 10 years.
20. Section 43B(h) inserted which states that, Payment to Micro or Small Enterprise Creditors will be allowed on actual payment basis only. Deduction on accrual basis shall be allowed only if payment is made within time limit specified under MSME Act (time limit specified under the act is 15 days where no written agreement exists between the parties and maximum 45 days in case of any written agreement exists between the parties)
21. Finance Act 2023 has introduced section 50AA which provides that any gains on transfer / redemption of units of specified mutual funds acquired on or after 1 April 2023 are deemed as short-term capital gains and will be taxed at Slab rates only irrespective of their holding period. For the purposes of section 50AA, “specified mutual fund” means a mutual fund by whatever name called, where not more than 35% of its total proceeds is invested in the equity shares of domestic companies.

GST RELATED AMENDMENTS

1. Composition taxable person allowed to supply GOODS through e-commerce operator.
2. No GST Input Tax Credit will be allowed on CSR Expenditure
3. Retrospective amendment w.e.f 01.07.2017, so as to provide that persons for compulsory registration in terms of sub section (1) of section and section 22 of the Act need not register if exempt under sub section (1) of section 23.
4. Time limit upto which GSTR-1/GSTR-3B/Annual Return/GSTR-8 for a tax period can be furnished by a registered person will be 3 years from the due date. Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons.
5. Monetary threshold for launching prosecution for the offences increased from Rs. 1 Crore to Rs. 2 Crore, except for the offences related to issuance of invoices without supply of goods or services or both.
6. Data sharing between income tax and GST Departments on an automatic and regular basis

OTHER AMENDMENTS

1. Maximum limit for investment in Senior Citizen Savings Scheme increased from Rs. 15 Lakhs to Rs. 30 Lakhs
2. Maximum deposit limit under Monthly Income Scheme of post office doubled to 9 lakhs
3. One time small savings scheme for women launched for a period of two years with a deposit of upto 2 lakhs bearing interest @ 7.5%