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 the new tax regime.
• New tax regime is now the default tax regime. Citizens will continue to have the option to avail the benefit of the old tax regime. The facility to switch between old and new tax regime every financial year is available only to 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. 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 from INR 50 lakhs to INR 75 lakhs for professionals, only where cash receipts are less than 5%.
• To support MSMEs 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 31.03.2023 to 31.03.2024. 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.
• For life insurance policies, other than ULIPs, issued on or after April 1, 2023, income or maturity proceeds will not be exempt where aggregate premium is above INR 5 lakh.
• 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. Capital gain from Market Linked Debentures will be treated as short-term capital gain and taxed at the investor 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 is 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 the same except that the surcharge rate of 37% will not apply. Highest surcharge shall be 25% for income above INR 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 or 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, 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. The compounding amount is lowered from the current range of 50% to 150% of tax amount to 25% to 100%.
• 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 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 to specify the place of supply irrespective of destination of goods, where supplier and recipient are located in India.
• A new section 158A of the CGST Act is being added to allow registered persons to share information with other systems in the prescribed manner.
• Basic custom duty rates on goods, other than textile and agriculture, reduced to 13% from 21%.
• BCD on bicycles, toys and parts of toys, other than parts of electronic toys and naphtha, increased to 35%, 70% and 2.5% from 30%, 60% and 1% respectively. Duty on styrene and vinyl chloride is 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 manufacture of camera module in cellular mobile phone. 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 from 20% to 15%.
• Denatured ethyl alcohol used in the chemical industry is exempt from BCD.
• BCD increased on silver, silver dore and bars to 10%, 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, 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 manufacture of Lab Grown Diamonds.
• Exemption of BCD on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode is continued. 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 on specified cigarettes revised upwards by 16%.