The Finance Minister, Nirmala Sitharaman, unveiled the Union Budget 2023 on 1st February 2023 aims to bolster infrastructure spending for creating more jobs and attract investment ahead of next year’s national election.
The Budget mentioned: Inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, financial sector as its seven priorities. Let’s decode Budget 2023.
But in the budget salaries people got good relief for taxation in new tax regime and phase out the old tax regime. So, must of salaries people may choose the new tax regime for the Financial Year 2023-24.
Some other key changes in Direct Taxes has made in budget which are discussing below
Budget 2023 Highlights: Direct Tax:
Slabs Change in New Tax Regime:
In the budget 2023, the New Tax Regime is converted to default tax regime now . But people can take option to choose the old tax regime instead of New Tax Regime.
But before choosing the old or new tax regime it is better to compare the tax computation between the two schemes and then select the tax regime.
Below are key changes in Slabs New Tax Regime For Financial year 2023-24
Total Income (Rs) | Rate(%) |
Up to 3,00,000 | Nil |
From 3,00,001 to 6,00,000 | 5 |
From 6,00,001 to 9,00,000 | 10 |
From 9,00,001 to 12,00,000 | 15 |
From 12,00,001 to 15,00,000 | 20 |
Above 15,00,000 | 30 |
Tax rebate on New Tax Regime:
Tax rebate on an income of up to ₹7 lakhs has been introduced under the new tax regime. It means that taxpayer no need to pay any tax if the income up to up to ₹7 lakhs. So, here the taxpayer saved the tax amount ₹ 25,000 on the income of ₹7 lakhs.
Standard deduction:
Standard deduction of ₹50,000 newly inserted in new tax regime for salaried people. So, here effectively we can save tax on total income ₹7.5 lakhs For salaried employees.
Family pension:
In the new tax regime, Standard deduction on such pension:
- ₹15,000 or
- 1/3rd of pension,
whichever is lower.
Changes In Surcharge under the New Tax Regime:
Highest surcharge under the new tax regime has been reduced to 25% from 37% for people earning more than ₹5 crore. The Maximum Marginal Rate brings down their tax rate from 42.74% to 39%.
Revised Turn Over Limit for Presumptive taxation u/s 44AD/ADA for Financial Year 2023-24:
In budget 2023 changes made in turn over limit for presumptive taxation. Below gives the revised limit for financial year 2023-24
Nature of Business | Financial year 2022-23 | Revised Limit From Financial year 2023-24 |
Presummptive taxation u/s 44AD [For Business] | 2 Cr | 3 Cr |
Presummptive taxation u/s 44ADA [For Profession] | 50 Lakhs | 75 lakhs |
Section 194BA: TDS on Winnings from Online Games:
Applicability :
Section 194BA states that if any person receives any income by way of winning from any online game during the financial year then the person responsible for paying such income shall deduct TDS from the net winnings at the end of the financial year.
Budget 2023 introduced a new section for the same, and hence, from 1st July 2023, if you receive any winnings from online games, then it will be taxable under Section 194BA.
Rate of TDS under section 194BA
- The payer shall deduct TDS at the rate of 30% from the net winnings of the user account.
- The payer shall deduct tax either during the financial year in case of withdrawal or at the end of the financial year.
- There is no threshold limit on the amount, and the tax will be deducted from the entire net winning amount.
Section 80CCH: Deduction in respect of contribution to Agnipath Scheme:
To promote Agnipath scheme, the following changes will take place from 1st April 2023:
- Contributions made by an Agniveer to the Agniveer Corpus Fund will be considered a tax deduction from their income.
- The Central Government’s contribution to the Agniveer Corpus Fund will be considered as income for the Agniveer which will also be eligible for deduction.
- Any amount received by an Agniveer or their nominee from the Agniveer Corpus Fund will be tax-free.
Agnipath Scheme:
Agnipath Scheme means the scheme for enrolment in Indian Armed Forces introduced vide letter No.1(23)2022/D(Pay/Services), dated the 29th December, 2022 of the Government of India in the Ministry of Defence.
Agniveer Corpus Fund:
Agniveer Corpus Fund means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held.
Other Income Tax Changes in Budget:
Leave Encashment:
The exemption threshold for Leave encashment has been increased to ₹25 lakh from ₹3 lakh for non-government employees.
Thus, at the time of retirement, leave encashment of up to ₹25 lakhs for a maximum period of 10 months is tax-free under Section 10(10AA).
TDS on EPF Withdrawal:
It is proposed to omit the second proviso to the section which provides that any person entitled to receive any amount on which tax is deductible under the section shall furnish his PAN to the person responsible for deducting tax, failing which tax shall be deducted at maximum marginal rate.
TDS rate has been reduced to 20% from 30% for the non-PAN cases towards the withdrawals of the Employees’ Provident Fund (EPF). . The amendments are proposed to come into effect from 1 April 2023,
No Penalty:
Where a loan is accepted or repaid by a primary agricultural credit society or a primary co-operative agricultural and rural development bank to its members or vice versa, no penalty would arise under Section 269SS or 269ST.
Capital Gains Exemption limit:
The capital gains tax exemption under Section 54 to 54F is restricted to Rs. 10 crores. Earlier, there was no threshold.
Section 80G donations:
Donations made to the following funds will not be eligible for 80G deductions:
- Jawaharlal Nehru Memorial Fund
- Indira Gandhi Memorial Trust and
- Rajiv Gandhi Foundation
Revised time limits for completing assessment:
Assessment | Time Limit |
Scrutiny assessment & best judgment assessment | Within 12 months from the end of the assessment year (additional 12 months if case referred to Transfer Pricing officer) |
Scrutiny assessment & best judgment assessment in case of updated return | Within 12 months from the end of the financial year in which such return is filed |
Fresh assessment post the ITAT order or revision order in case of updated return | Within 12 months from the end of the financial year in which the order is passed |
Assessments pending on date of initiation of search or requisition being made | Additional 12 months from regular due date |
Section 50AA: Special provision for computation of capital gains in case of Market Linked Debenture.
Applicability:
After section 50A the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2024, namely Ads by It is proposed to insert a new section 50AA in the Income-tax Act to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the “Market Linked Debentures” as reduced by the cost of acquisition of the debenture and the expenditure incurred wholly or exclusively in connection with transfer or redemption of such debenture, as capital gains arising from the transfer of a short term capital asset. It is further proposed to define the expression ‘Market linked Debenture’ to mean a security by whatever name called, which has an underlying principal component in the form
Implication:
The full value of consideration received or accruing as a result of the transfer or redemption or maturity of such debenture as reduced by
(i) the cost of acquisition of the debenture; and
(ii) the expenditure incurred wholly and exclusively in connection with such transfer or redemption or maturity, shall be deemed to be the capital gains arising from the transfer of a short-term capital asset:
Provided that no deduction shall be allowed in computing the income chargeable under the head “Capital gains” in respect of any sum paid on account of securities transaction tax under the provisions of Chapter VII of the Finance (No. 2) Act, 2004. Explanation.– For the purposes of this section “Market Linked Debenture” means a security by whatever name called, which has an underlying principal component in the form of a debt security and where the returns are linked to the market returns on other underlying securities or indices, and includes any security classified or regulated as a market linked debenture by the Securities and Exchange Board of India.’.
Amendments in co-operative society:
New manufacturing initiatives:
The government has extended the benefit of concessional tax rate of 15% to new co-operatives that commence manufacturing by 31st March, 2024.
Sugar co-operatives:
Any expenditure that was disallowed to sugar co-operatives prior to 2016-17, can be claimed now by making an application to the Assessing Officer.
Section 194N:
It is proposed to insert a third proviso in the said section to provide that where the recipient is a co-operative society, the requirement to deduct tax would apply only when the payment of amount or aggregate of amount in cash during the year exceeds INR 3 crores.
The amendment is proposed to come into effect from 1 April 2023, and accordingly would apply in relation to AY 2023-24 and thereafter.
Cash deposit limit:
Limit for cash deposits and loans by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) is being increased to a maximum of ₹2,00,000 per member.
