BUDGET 2023-2024

Taxation Policy

DIRECT TAX

Personal Tax

Old Tax Regime:

• There are no changes proposed in tax rates including surcharge and cess, income tax exemption limits and income slabs.

New Tax Regime:

• Basic exemption limit hiked from ₹ 2,50,000 to ₹ 3,00,000.
• Standard Deduction of ₹ 50,000 and Family Pension of ₹ 15,000 to be allowed as deduction to salaried individuals.
• Deduction of amount paid or deposited in  the Agniveer Corpus Fund.
• The highest surcharge capped at 25 percent for income above ₹ 2 Crores.
• Taxable income for rebate is proposed to be increased to ₹ 7 Lacs from existing ₹ 5 Lacs.
• Option to exercise before filing of Return of Income for the Old Tax Regime:
• Once in case of person have Business or Professional income. 
• Year on Year basis for Others.

New Proposed Slab Rate

Capital Gain

• Deduction from capital gains arising on sale of residential house or any other capital assets by further investment into new residential house shall be capped to ₹ 10 crores.
• It is proposed to clarify that sale consideration from transfer of property under Joint Development Agreement would include stamp duty value of share of Individual/ HUF as well as amount received in cash or cheque or draft or by any other mode.
• For computing capital gains, the cost of acquisition/ improvement shall not include interest which is claimed as deduction while computing income from house property or any other provisions of the Act.
• The conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and also cost of acquisition and period of holding of the original asset to be considered while computing capital gains.

Other amendments

• The turnover limit for presumptive taxation has been proposed to increase from ₹ 2 crore to ₹ 3 crore for small business and to ₹ 75 Lacs from ₹ 50 Lacs in case of profession where the eligible assessee’s cash receipts during the year, does not exceed five per cent of the total gross receipts/turnover.
• Extension of deeming provisions, where sum of money received by a not ordinarily resident exceeding ₹ 50,000 without consideration from a person resident in India is deemed to accrue or arise in India.
• Exemption on leave encashment on retirement of non-government salaried employees increased from ₹ 3 Lacs to ₹ 25 Lacs.
• It is proposed to have uniform methodology for computing the value of perquisite with respect to rent free accommodation or accommodation provided employees at concessional rate.
• Other amendments
• Maturity proceeds (unless received n death of a person) of insurance policies other than ULIP issued on or after 01 April 2023, having premium above ₹ 5 Lacs in a year shall be taxable. Deduction shall be allowed for premium paid, if such premium has not been claimed as deduction in earlier years.
• It is proposed to clarify that the benefit or perquisite arising from Business and Profession in cash or in kind or partly in cash and partly in kind will be considered as taxable income on which TDS provisions will also apply accordingly.

CORPORATE TAX

• There are no changes proposed in tax rates, surcharge and cess.
• The provisions relating to taxability of share premium exceeding fair value in the hands of closely held companies extended to issue of shares to non-residents as well.
• Tax Payers shall be required to furnish a statement containing the particulars of preliminary expenditure in relation to feasibility report, project report, market or any other survey or engineering services as per prescribed manner.
• Deduction for payments to MSME would be allowed only when actually paid or on accrual basis only if the payment is within the time mandated under MSMED Act.
• Gains from market linked debentures to be taxed as Short Term Capital Gain at normal tax rates.
• Cost of all intangible assets / rights other than those specified shall be nil.
• Tax holiday for old SEZ units available only if export proceeds are repatriated to India within a period of 6 months from end of the financial year or such other period as permitted by RBI.
• Non-residents engaged in the business of exploration of mineral oils / civil constructions, etc who opts for presumptive taxation shall not be allowed the set off of unabsorbed depreciation and brought forward loss in that previous year.

START-UPS

• It is proposed that the change in shareholding of eligible start-ups not impact carry forward of loss as long as such loss in incurred during the period of ten years (earlier seven years) from the year of incorporation.
• Last date for incorporation for claiming profit linked tax exemption for eligible start-ups extended by one year up to 31 March 2024.

OTHER AMENDMENTS

• A penalty of ₹ 5,000 is imposable to prescribed reporting financial institution in case of false or inaccurate information submitted by the account holder.
• Amendment to penalty provisions in consequence to amendment in new TDS provisions with respect to value of benefits and perquisites as well as Virtual Digital assets.
• Accumulated losses and unabsorbed depreciation is proposed to be allowed to be carried forward in case of sale of shareholding by Central Government or State Government or Public Sector Company in a Public Sector Company or any other company which results in change in share-holding below fifty-one percent and transfer of control to the buyer.
• Accumulated losses and unabsorbed depreciation is proposed to be allowed to be carried forward in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment.
• The restrictions on interest expenditure up to 30 percent of EBITDA in respect of any debt issued by nonresident associate enterprise which does not apply to Banking and Insurance companies is proposed to extend to NBFCs, as may be notified.
• It is proposed to tax distributed income by business trusts (REITs and InvITs) in the hands of a unit holder (other than dividend, interest or rent) which is not taxed in the hands of business trust.

GIFT CITY

• Tax neutrality on relocation of offshore funds to IFSC extended to 31 March 2025 (earlier 31 March 2023).
• Distribution of income by Offshore Banking Unit ('OBU') on Offshore Derivative Instruments issued to non resident exempted as long as the amount is charged to tax in the hands of OBU.

CAHRITABLE TRUST

• It is proposed to make amendments relating to exemption provided to charitable trusts and institution:
• To provide clarity on tax treatment on replenishment of corpus and on repayment of loans/borrowings
• Treat only 85 per cent of donation made to another trust as application
• Omit the redundant provisions related to rolling back of exemption;
• Combine provisional and regular registration in some cases;
• Modify the scope of specified violation;
• Provide for payment of tax on assets if a trust does not apply for exemption after getting provisional exemption and for re-exemption after expiry of exemption;
• Align of time for furnishing of certain forms;
• Clarify that the time provided for furnishing return of income for claiming exemption shall not include the time provided for furnishing updated return.

COOPERATIVE SOCIETY

• It is proposed that no penalty shall be leviable where the loans / deposits are accepted or repaid by Primary Agricultural Credit Societies and Primary Co-Operative Agricultural and Rural Development Bank from or to its members up to ₹ 2 Lacs.
• Proposed to extend the benefits of concessional tax rate of 15 percent to promote new manufacturing cooperative societies commencing manufacturing till 31 March 2024.
• Final Cane Price (FCP) allowed as deduction to the extent it is approved by the Government.
• It has been proposed to increase the threshold limit for TDS on cash withdrawal up to ₹ 3 Crores from ₹ 1 crore in a year by co-operative society.

TDS

• TDS applicable if the aggregate payment exceeds ₹ 10,000 during the financial year in case of lottery, crossword puzzles games, etc.
• It is proposed to introduce new provisions relating to taxability and TDS on net winnings from online games whether in cash or in kind or both in the user account at the end of the financial year or before releasing the payment in the manner as may be prescribed (w.e.f. 01 July 2023).
• It is proposed to withdraw the exemption from TDS currently available on interest payment on listed debentures to residents.
• It has been proposed to extend the facility of obtaining lower / NIL withholding certificate to payouts by InVITs/ REITs.
• The TDS rate on withdrawal of taxable component from Employees’ Provident Fund Scheme in non-PAN cases is proposed to be reduced to 20 percent from 30 percent.
• Mechanism provided for claiming TDS credit for incomes offered to tax in earlier years within a period of 2 years from end of financial year in which TDS was deducted (w.e.f. 01 October 2023).
• It is proposed that higher rate of TDS for non-filers of income-tax returns shall not apply in case of assesses who are not required to file tax returns.
• It has been proposed to provide tax treaty relief where TDS is required to be deducted in case of income earned from units of Mutual Funds in hands of non-resident on subject to furnishing of tax residency certificate.

TCS

• It is proposed to levy TCS at 20 percent (earlier 5 percent), without any threshold limit on the overseas tour package and remittance under Liberalized Remittance Scheme other than remittance for education purpose or medical treatment (w.e.f. 01 July 2023).
• It is proposed that higher rate of TCS for non-filers of income-tax returns shall not apply in case of assesses who are not required to file tax returns.

ASSESSMENTS

• Proposal of enabling powers to Assessing Officer to direct the assessee to get the inventory valued by the nominated Cost Accountant, cost of which shall be borne by the Central Government.
• Provisions introduced for the assessment after modified return of income filed in case of reorganization.
• Proposed to extend the time limit to 30 September 2023 for disposing pending rectification application by Interim Board of Settlement.
• It has been proposed that the time available for completion of assessment including for Updated Return relating to the assessment year commencing on or after the 01 April 2022 shall be 12 months from the end of the assessment year in which the income was first assessable.
• Time limit to furnish documents relating to international transactions and specified domestic transactions to the Transfer Pricing officer has been proposed to reduce to 10 days from 30 days, which can be further extended up to 30 days.
• It is proposed to allow the authorised officer to take assistance of specific domain experts like digital forensic professionals, valuers, and services of other professionals like locksmiths, carpenters etc. during the course of search and also to aid in accurate estimation of undisclosed income held in the form of property by the assessee.
• It is proposed that in search cases as well as where requisition of books of accounts is made, the period of limitation of pending assessments shall be extended by twelve months.
• E-Dispute Resolution Scheme, E- advance rulings Scheme have been notified and directions issued for implementation of e-proceedings and faceless schemes.

LITIGATION

• New authority is being proposed to be created at Joint Commissioner/ Additional Commissioner level for disposing off pending small appeals before CIT(A).
• It is proposed that appeal against certain penalty order passed by Commissioner of Income tax (Appeals) or revision orders by Commissioner etc shall now be made to the Income Tax Appellate Tribunal.
• It is proposed to amend the time for filing of appeal against the order of the Adjudicating authority under Benami Act within a period of 45 days from the date when such order is received by the Initiating Officer or the aggrieved person.

INDIRECT TAX

GOODS AND SERVICE TAX

Amendments in Central GST Act, 2017

• Option to opt for Composition levy to the person engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source.
• The CGST Act has been amended to restrict availment of input tax credit in respect of supply of warehoused goods to any person before clearance for home consumption by including the value of such transactions in the value of exempt supply.
• Input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to its obligations under corporate social responsibility.
• Restrictions on filing of GST return/ statement under form 1, 3B, 8 and 9 respectively to a maximum period of three years from the due date of filing of the relevant return / statement.
• Minimum threshold of tax amount for launching prosecution under GST raised from ₹ one crore to ₹ two crore, except for the offence of issuance of invoices without supply of goods or services or both.
• Reduction in the compounding amount from the present range of 50 percent to 150 per cent of tax amount to the range of 25 percent to 100 percent.
• Decriminalization of certain offences viz.-
• obstruction or preventing any officer in discharge of his duties;
• deliberate tempering of material evidence;
• failure to supply the information.
• It is proposed to enable sharing of the information furnished by the registered person in his return or application of registration or statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details on the common portal, with other systems in a manner to be prescribed.
• Certain transactions/ activities such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance has been considered as non-GST supply with retrospective effect from 01 July 2017 and it is further clarified that no refund shall be available on any taxes paid during the period 01 July 2017 to 31 January 2019.

Customs & Excise

• Green Mobility
• Exemption in excise duty on GST paid compressed biogas

• Electronics
• Relief in customs duty on import of certain parts on mobile phones
• Reduction on basic custom duty on parts of open cells of TV panels to 2.5 percent

• Electricals
• Increase in basic customs duty on electric kitchen chimney from 7.5 percent to 15 percent
• Reduction in basic customs duty on chimney heat coils from 20 percent to 15 percent

• Chemicals and Petrochemicals
• Exemption of basic custom duty on chemicals and petrochemicals
• Reduction in basic customs duty on acid fluorspar and crude glycerine to 2.5 percent

• Marine Products
• Reduction of duty on key inputs for domestic manufacture of shrimp feed

• Lab Grown Diamonds
• Reduction of basic customs duty on seeds used in their manufacturing

• Precious Metals
• Increase in customs duties on articles made of gold and platinum
• Increase in import duty on silver dore, bars and articles

• Compounded Rubber
• Increase in basic customs duty on compounded rubber from 10 percent to 25 percent

• Cigarettes
• National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by about 16 percent

Download your copy at BUDGET 2023-24