UNION BUDGET 2023 HIGHLIGHTS

DIRECT TAXES

• Tax exemption limit increased from Rs. 2.5 lakh to Rs. 3 lakh and slab structure changed in the new regime as below:

• Standard Deduction of INR 50,000 and deduction from family pension of INR 15,000 to be allowed to new tax regime.

• New Tax regime now is the default tax regime. However, citizens will continue to have the option to avail the benefit of old tax regime. To be noted- the facility to switch between old and new tax regime in every financial year is available to only those individuals who have salaried income and do not have business income.

• Leave encashment tax exemption increased from INR 3 lakhs to INR 25 lakhs 
• Senior Citizens Saving Scheme limit increased from Rs. 15 lakh to Rs.30 lakh and the maximum deposit limit for Monthly Income Account Scheme will be enhanced from INR 4.5 lakh to INR 9 lakh for single account and from INR 9 lakh to INR 15 lakh for joint account.

• Threshold limit increased to INR 3 crore for Co-operatives to withdraw cash without being subjected to TDS.

• 15% concessional tax rate provided to a new co-operative society formed on or after 01.04.2023

• Presumptive Taxation benefits increased from INR 2 crores to INR 3 crore for micro enterprises and increased from INR 50 lakhs to INR 75 lakhs for professionals ( only in case where cash receipts less than 5%)

• To support MSME’s in timely receipt of payments, deduction will be allowed for expenditure incurred on payments made to them only when payment is actually made.

• Date of incorporation for income tax benefits for startups extended from 31.3.2023 to 31.3.2024. Further, benefit of carry forward of losses on change of shareholding of start-ups increased from seven years of incorporation to ten years

• Deduction from Capital Gains on investment in residential house under sections 54 and 54F capped to INR 10 crore.

• In cases where aggregate premium for life insurance policies — other than unit-linked insurance plans (ULIPs) — issued on or after April 1, 2023, is above INR 5 lakh, income/maturity proceeds will not be exempt.

• Threshold limit for TDS of INR 10,000 on online gaming removed

• Conversion of Gold into Electronic Gold Receipts and vice versa not treated as capital gain

• TDS rate reduced from 30% to 20% for taxable portion of EPF withdrawal in Non-PAN cases

• New Section 50AA to be introduced. This section will treat capital gain from ‘Market Linked Debentures’ as short term capital gain to be taxed at investor’s slab rate instead of current long term capital gain taxed at 10% without indexation.

• TDS to be levied on interest from listed bonds as per Section 193. The clause providing exemption for such interest to be removed.
• Rebate Limit increased from INR 5 lakhs to INR 7 lakhs in the new tax regime

• For Individuals, HUF, AOP (other than co-operative), BOI and AJP under the new regime, surcharge would be same except that the surcharge rate of 37 per cent will not apply. Highest surcharge shall be 25 per cent for income above  2 crore.

INDIRECT TAXES

• Sections 37, 39, 44 and 52 of CGST Act, 2017 are being amended to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return /statement.

• Amendments are being made in section 10 and section 122 of the CGST Act to enable unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions

• Decriminalisation of certain offences specified under clause (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017 i.e obstruction or preventing any officer in discharge of his duties; deliberate tempering of material evidence; failure to supply the information. Further,  from the current range of 50% to 150% of the tax amount, the compounding amount is lowered to a range of 25% to 100%. This is done in order to increase the minimum tax threshold for starting a GST prosecution from Rs 1 crore to Rs 2 crore with the exception of the crime of issuing bills without providing goods or services, or both

• Paras 7, 8 (a) and 8 (b) were inserted in Schedule III of CGST Act, 2017 with effect from 01.02.2019 to keep 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, outside the purview of GST. 

• Clause (16) of section 2 of IGST Act is amended to revise the definition of “non-taxable online recipient”

• Input Tax Credit not allowed in respect of goods and services treated as expenditure related to CSR

• Proviso to sub-section (8) of section 12 of the IGST Act is being omitted so as to specify the place of supply, irrespective of destination of the goods, in cases where the supplier of services and recipient of services are located in India.

• A new section 158A of the CGST Act is being added to allow the registered person to share information with other systems in a manner that will be prescribed, whether it be information provided in a return, registration application, statement of outward supplies, or details uploaded for the creation of an electronic invoice, E-way bill, or any other details on the common portal

• Basic custom duty (BCD) rates on goods, other than textile and agriculture, reduced to 13% from 21%.
• BCD on bicycles, toys and part of toys, other than parts of electronic toys and naphtha has been increased to 35% 70% and 2.5% from 30%, 60% and 1% respectively. The duty on styrene and vinyl chloride is being increased from 2% to 2.5%

• Exemption provided to GST Paid compressed bio gas contained in blended compressed natural gas

• Custom Duty exemption provided to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles

• Customs duty relief provided on camera lens and import of certain parts and inputs for use in the manufacture of camera module in cellular mobile phone. Further, concessional duty on lithium-ion batteries continued for another year

• Basic custom duty on parts of open cells of TV panels reduced to 2.5% from 5%

• To encourage manufacture of electric kitchen chimneys, BCD on electric kitchen chimney increased from 7.5% to 15% and that of heat coils reduced to 15% from 20%

• Denatured ethyl alcohol which finds application in chemical industry is exempt from BCD
• BCD increased on silver, silver dore and bars to 10% and cess increased to 5% on silver and 4.35% on silver dore. Custom duty on imitation jewellery enhanced from 20% to 25%

• To increase export competitiveness of marine products, particularly shrimps, duty reduced from 15% to 5% on key inputs for domestic manufacture of shrimp feed

• BCD reduced to 0% from 5% for seeds used in the manufacture of Lab Grown Diamonds

• Exemption of BCD on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode is continued and concessional BCD of 2.5% on copper scrap continued

• BCD on compounded rubber increased to 25% from 10% or INR 30/Kg whichever is lower to be at par with natural rubber other than latex

• National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by 16%