The Finance Minister presented the Indian Budget 2023-2024 on 01.02.2023. There are seven salient areas that the Budget focuses on (Highlights of Indian Budget 2023-2024 are available at the link: https://theindianlawyer.in/blog/).
This article focuses on the tax aspects under the Budget. Direct Tax proposals under the Budget 2023-2024 aims to maintain continuity and stability of taxation, further simplify and rationalize various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens. The new income tax regime has now become the default tax regime. There are several changes in the personal taxes possibly as an incentive for the general elections that will be in 2024.
The Government has been focusing on a programme /vision called “Vision for Amrit Kaal” – an empowered and inclusive economy. The said programme focuses on certain areas that will strengthen the economy and help India to ride the global recession. The Vision for the Amrit Kaal includes technology-driven and knowledge-based economy with strong public finances, and a robust financial sector. To achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas is essential. The economic agenda for achieving this vision focuses on three things: first, facilitating ample opportunities for citizens, especially the youth, to fulfil their aspirations; second, providing strong impetus to growth and job creation; and third, strengthening macro-economic stability.
The changes proposed in the Budget 2023-2024 (Finance Bill 2023) as presented by Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs are as follows:
|S N||Subjects/ Heads under Tax Regime||Under Previous Regime(s)||Current Regime||Comments|
|1.||MSMEs and Professionals
|Benefit of Presumptive Taxation for Micro enterprises with turnover up to 2 crore and certain professionals with turnover of up to 50 lakh.||Benefit of Presumptive Taxation for Micro enterprises with turnover up to 3 crore and certain professionals with turnover of up to 75 lakh respectively, to the tax payers whose cash receipts are no more than 5 per cent.
Proposal to allow deduction for expenditure incurred on payments made to MSMEs only when payment is actually made.
Proposals for Co-operative sector
|i. New Co-operatives that commence manufacturing activities till 31.3.2024||Tax Rate – 15 %||Same as available to new manufacturing companies.|
|ii. Sugar co-operatives||To claim payments made to sugarcane farmers for the period prior to Assessment year 2016-17 as ‘expenditure’.||This is expected to provide them with a relief of almost 10,000 crore.|
|iii. Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).
|Cash deposits and loans in cash – higher limit of 2 lakh per member.
|iv. Co-operative societies.||Higher limit of 3 crore for TDS on cash withdrawal|
|3.||Start Ups||Date of incorporation for income tax benefits to start-ups extended from
31.03.23 to 31.03.24
|Benefit of Carry forward of losses on change of shareholding of start-ups for seven years of incorporation
|Benefit of Carry forward of losses on change of shareholding of start-ups from – for Ten years of incorporation
|4.||Tax Concessions Deduction from Capital gains on investment in residential
house under sections 54 and 54F of Income Tax Act, 1961
|Capped up to 10 Crore|
Income of authorities, boards and commissions set up by statutes of the Union or State for the purpose of housing, development of cities, towns and villages, and regulating, or regulating and developing an activity or matter
|Proposed to be exempted from Income Tax|
|Removed the minimum threshold of 10,000/-|
|ii. Conversion of gold into electronic gold receipt and vice versa||Not treated as capital gain|
|iii. Taxable portion of EPF withdrawal in non-PAN cases||TDS – 30%||TDS – 20%|
|6.||Personal Income Tax||To benefit hard-working middle class.
|i. Tax Rebate Limit||Upto 5 Lakh||Upto 7 lakh||Thus, persons in the new tax regime, with income up to 7 lakh will not have to
pay any tax.
|ii. Tax Structure/Tax Regime||Six income slabs starting from ` 2.5 lakh||Five income slabs starting from 3 lakhs, the new tax rates are:
a) 0-3 lakh – Nil
b) 3-6 lakh – 5 %
c) 6-9 lakh – 10 %
d) 9-12 lakh – 15 %
e) 12-15 lakh – 20 %
f) Above 15 lakh – 30 %
|It is a reduction of 25 % on what he or she is required to pay now.|
|iii. Salaried class and the pensioners including family pensioners||To extend the benefit of standard deduction to the new tax regime||Each salaried person with an income of 15.5 lakh or more will thus stand to benefit by ` 52,500.
| iv. Highest Rate of Surcharge
|37%||25%||This would result in reduction of the maximum tax rate to 39 % from 42 %.
|v. Leave encashment on retirement of non-government salaried employees||Tax exemption limit – 3 lakh||Tax exemption limit – 25 lakh|
Indirect Tax Proposal of Budget 2023 aims to promote exports, boost domestic manufacturing, enhance domestic value addition, encourage green energy and mobility. The changes are as follows:
|S No||Subject/ Tax Head||Previous||Current||Comments|
|1.||Basic Customs duty rates on goods, other than textiles and Agriculture||21%||13%||As a result, there are minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha.|
i. GST-Paid Compressed bio gas
ii. Import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
Excise duty was payable
Excise duty Exempted
|i. Import of certain parts and inputs like camera lens.||Custom duty was Payable||Custom duty Exempted|
|ii. Parts of open cells of TV Panels||Custom duty 2.5%||To promote value addition in manufacture of televisions.|
|iii. Electric kitchen Chimney||7.5%||15%|
|iv. Heat coils
|4.||Chemicals & Petrochemicals
|To facilitate the endeavor for energy
|i. Denatured ethyl alcohol||Exempted|
|ii. Acid grade fluorspar||5%||2.5%|
|iii. Crude glycerin||7.5%||2.5%|
|5.||Lab Grown Diamonds
Seeds used in the manufacture of Lab Grown Diamonds
|Propose to reduce Duty|
|i. Articles made out of dore and bars of gold and platinum
|Proposed to increase the import duty.|
|ii. Silver dore, bars and articles||Proposed to increase the import duty||To align them with that on gold and platinum.|
|i. Raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode
|Basic Custom Duty
|Basic Custom Duty Exemption|
|ii. Copper scrap||Basic Custom Duty – 2.5%||Basic Custom Duty – 2.5%|
|Basic Custom Duty – 10 per cent||Basic Custom Duty – 25 per cent or ` 30/kg whichever is lower||At par with natural rubber other than latex, to curb circumvention of Duty.|
|9.||Cigarettes||Proposed to be revised upwards by about 16 %.|