- New Tax Regime
With effect from AY 2024-25, it is proposed that the following rates provided under the proposed Sub Section 1A of Section 115BAC of the Act shall be the rates applicable for determining the tax payable under the new tax regime:
Up to Rs 3 lacs Nil, 3lacs to 6 lacs 5%, 6 lacs to 9 lacs 10%, 9 lacs to 12 lacs 15%, 12 lacs to 15 lacs 20%, above 15 lacs 30%
- Surcharge on Income Tax
It is proposed to restrict the maximum surcharge applicable from 37% to 25% for those who are exercising the option under Section 115BAC not having any income u/s 115BAD of the Act.
The amendments to surcharge has been dealt separately in another article “ BUDGET 2023 – Changes in Surcharge Rates”
- Rebate u/S 87A
With effect from AY 2024-25, an assesse being an individual resident in India whose income is subject to tax u/s 115BAC(1A) (new tax regime) shall now be entitled to a rebate of 100% of the amount of Income tax payable in a total income not exceeding Rs 7 lakh.
- Promoting timely payments to Micro and Small Enterprises
In order to promote timely payments to MSME enterprises it is proposed to include payments made to MSME within the ambit of Se 43B of the Act. Section 15 of MSMED Act mandates payments to micro and small enterprises within the time as per the written agreement which cannot exceed 45 days and within 15 days if there is no such agreement. However, the it is also proposed that the proviso to Section 43B of the Act shall not apply to such payments. This will take effect from AY 2024-25 onwards.
- Relief to sugar co-operatives from past demand
With effect from AY 2023-24, It shall provide that in case of sugar co-operative, where any deduction in respect of any expenditure incurred for the purchase of sugar cane has been claimed by an assesse and such deduction has been disallowed wholly or partly by the AO, on the basis of application made by such assesse in this regard, recompute the total income of such assesse for such previous year. The AO shall allow such deduction to the extent the expenditure incurred at a price which is equal to or less than the price fixed or approved by the Govt.
- Increasing threshold limit for co-operatives to withdraw cash without TDS
It is proposed to amend Section 194N of the Act by inserting a new proviso to provide that where the recipient is a co-operative society, the provisions of this Section shall have effect as if for the words one crore rupees the words three crore rupees had been substituted w.e.f AY 2023-24 onwards.
- Relief to start-ups in carrying forward and set off of losses
Relaxation to Section 79 has been provided in case of an eligible start up as referred to in Section 80-IAC of the Act. The condition of continuity of at least 51% shareholding is not applicable to the eligible start up, if all the shareholders as on the last day of the year in which loss was incurred continue to hold those shares on the last day of the year in which the loss is set-off, the loss is allowed to set-off under this relaxation only if it has been incurred during the period of seven years beginning from the year in which such company is incorporated. The amendments will take effect form AY 2023-24 onwards.
- Penalty for cash loan/transactions against primary co-operatives
With effect from AY 2023-24, It is proposed to amend the provisions to Section 269SS and 269T and to increase the limit of Rs 20,000/- to Rs 2,00,000/- . This will imply if the loan or deposit is taken or repaid by Primary Agricultural Credit Societies and Primary Agricultural and Rural Development Bank or its members.
- Extension of date of incorporation for eligible start up for exemption
It is proposed to amend the provisions of Section 80IAC to promote the development of start ups in India and to provide them with a competitive plat form, extend the period of incorporation of eligible start ups to AY 2024-25. This will take effect from AY 2023-24.
- Conversion of Gold to electronic gold receipt and vice versa
From AY 2024-25, any transfer of physical gold to E-Gold receipt or E-gold receipt to physical gold shall not be considered as transfer. It is also provided that once the E-gold receipt became the property of the person as a consideration of transfer, the cost of acquisition shall be deemed to be the cost of golds in hands of the person in whose name the E-Gold receipt is issued. The holding period for the purpose of the capital gain shall include the period for which the gold was held by the assesse prior to the conversion into E-Gold Receipt.
- Tax incentives to IFSC
With effect from 01-04-2023, It is proposed to amend clause 4E of Section 10 to provide exemption to any income distributed on the offshore derivative instruments entered into with the offshore banking unit of IFSC. It is also provided that such exempted shall include only the amount which has been charged to tax in the hands of the IFSC banking unit u/s 115AD of the Act.
- Exemption to development authorities
It is proposed to amend the Act to exclude the income of a body or authority or board or trust or commission not being a company from the scope of clause 46 of Section 10 of the Act for their income. This will accordingly apply from AY 2024-25 and subsequent years.
- Ease in claiming deduction on amortization of preliminary expenses
It is proposed to amend Section 35D of the Act to remove the condition for activity in connection with these expenses to be carried out by a concern approved by the Board. Instead, the assesse shall be required to furnish a statement containing the particulars of this expenditure within the prescribed period to the prescribed income tax authority in the prescribed form and manner. This amendment will take effect from 01-04-2024.
- 15% concessional tax rate to new manufacturing co-operative society
It is proposed to insert new Section 115BAE with effect from AY 2024-25 in which concessional tax regime is being provided for the new manufacturing cooperative societies as well.
- Increasing threshold limits for presumptive taxation schemes
It is proposed to provide that u/s 44AD the eligible business where the amount or aggregate of amount received during the previous year in cash does not exceed 5% of the total turnover or gross receipts a threshold limit of Rs 3 cr will apply. It is also proposed to provide a limit of Rs 75 lakhs for professions who are covered u/s 44AA of the Act to exercise Section 44ADA if the aggregate amount received in cash during the year does not exceed 5% of the total gross receipts. This will take effect from AY 2024-25 onwards
- Extending the scope for deduction of tax at source to lower or nil rate
Section 194 LBA of the Act provides that business trust shall deduct and deposit tax at the rate of 5% on interest income of on resident unit holders. It is proposed to amend 197(1) of the Act to provide that the sums on which tax is required to be deducted u/s 194LBA of the Act shall be eligible for certificate for deduction at lower rate with effect from AY 2023-24.
- Extending deeming provision to gift to NOR
Finance Act 2019 inserted clause viii to sub Section 1 of Section 9 of the Act to provide that any sum of money in excess of Rs 50000/- received by a non-resident without consideration from a person resident in India on or after 05-07-2019 shall be deemed to accrue or arise in India. It has come to the notice that certain persons being not ordinarily resident are receiving the gifts from Resident Indian and not paying tax. In view of the above it is with effect from 01-04-2024 proposed to amend 9(1)(viii) of the Act to extend this deeming provision to Not ordinary resident.
- Removal of exemption of news agency under clause (22B) of Section 10
It is proposed to amend Section 10(22B) of the Act to withdraw the benefit of exemptions of income available to news agency by inserting fourth proviso to clause 22B of Section 10 of the Act with effect from AY 2024-25.
- Tax avoidance through distribution by business trusts to its unit holders
In order to avoid dual non taxation of any distribution made by the business trust it is proposed to make such sum received by the unit holder is taxable in his hands. However, provision is also proposed for a situation when the sum received represents redemption of unit held by him.
Hence it is proposed to amend the Act with effect from AY 2024-25 by way of insertion of clause xii to Section56(2) of the Act to provide that the income chargeable to income tax under the head Income from other sources shall also include any sum not in the nature of income referred to in 10(23FC) & 10(23FCA) and is not chargeable to tax u/s 115UA(2) of the Act.
- Removal of exemption from TDS on payment of interest on listed debentures to a resident
It is proposed to omit clause ix of the proviso to Section 193 of the Act, thereby removing the exemption from TDS on payment of any income to a resident by way of interest on Sectionurities with effect from 01-04-2023.
- Preventing misuse of presumptive schemes under Section 44BB & 44BBB
From AY 2024-25, it is proposed to amend Section 44BB and 44BB of the Act to provide that notwithstanding anything contained in Section 32(2) and 72(1) where an assesse declares profits and gains of business for any previous year with the provisions of presumptive taxation no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assesse for such previous year.
- TDS & taxability on net winnings from online games
It is proposed to amend Section 194B to exclude online games from the purview of the said Section. New Section 194BA is proposed to be introduced with effect from 01-07-2023, where the net winnings are wholly or partly in kind and the cash is not sufficient to meet the liability of tax deduction in respect of whole of net winnings, the person responsible for paying shall before releasing the winnings ensure that tax has been paid in respect of winnings.
- Increasing rate of TCS of certain remittances
In order to increase TCS on certain foreign remittances and on sale of iverses tour packages it is proposed to amend Section 206(1G) of the Act. The current and proposed TCS rates are tabulated as under:
| Sl no | Type of remittance | Present rate | Proposed rate |
| 1 | Purpose of any education, if the amount being remitted out is a loan obtained from any financial institutin as defined in Section 80E | 0.5% of the amount or the aggregate of the amount in excess of Rs 7 lakh | No change |
| 2 | For the purpose of education other than 1 above or for the medical treatment | 5% of the amount or the aggregate of the amount in excess of Rs 7 lakh | No change |
| 3 | Overseas tour package | 5% without any threshold limit | 20% without any threshold limit |
| 4 | Any other case | 5% of the amount or the aggregate of the amount in excess of Rs 7 lakh | 20% without any threshold limit |
This amendment will take effect from 01-07-2023
- Limiting the roll over benefit claimed u/s 54 & 54F
With effect from AY 2024-25 it is proposed to impose a limit on the maximum deduction that can be claimed by the assesse u/s 54 and 54F of the Act to Rs 10 crore. It has been provided that if the cost of the new asset purchased in more than Rs 10 crores the cost of the asset shall be deemed to be Rs 10 crores.
- Rationalisation of exempt income under life insurance policies
In order to curb misuse of Section 10(10D) pf the Act it is proposed to tax the income from insurance policies having premium or aggregate of premium above Rs 5 lacs in a year. Income is proposed to be exempt if received on death of the insured person. Deduction on the premium is allowed if such premium has not been claimed as deduction earlier.
- Alignment of provisions of Section 45(5A) with TDS u/s 194IC
It is proposed to amend Section 45(5A) of the Act so as to provide that the full value consideration shall be taken as the stamp duty value of his share as increased by any consideration received in cash or cheque or draft or by any other mode.
- Double deduction claimed on interest on borrowed capital for acquiring, renewing or reconstructing a property
It is proposed to insert a proviso after clause ii of Section 48 of the Act so as to provide that the cost of acquisition or the cost of improvement shall not include the amount of interest claimed u/s 24 or chapter VIA. This is applicable from AY 2024-25 onwards.
- Alignment of timeline provisions u/s 153 of the Act
With effect from 01-04-2023 it is proposed to insert a new sub Section to Section 153 to provide that where an assessment or reassessment is pending on the date of initiation of search u/s 132 or 132(A),the period available for completion of assessment or reassessment shall be extended by 12 months.
- Penalty for furnishing inaccurate SFT or reportable account
It is proposed to insert new sub Section to Section 285BA of the Act which shall provide that if there is inaccuracy in the statement of financial transactions submitted by a prescribed reporting financial institution and inaccuracy is due to false or inaccurate information submitted by account holder, a penalty of Rs 5000 is imposable. It is applicable form 1-04-2023
- Tax treaty relief at the time of TDS u/s 196A of the Act
It is proposed to insert a proviso to Section 196A(1) of the Act to provide that the TDS would be at the rate which is lower of the rate of 20% and the rate provided in the agreement referred to in Section 90(1) or 90A(1) of the Act, in case of a payee to whom such agreement applies and such payee has furnished Tax Residency Certificate. This amendment will take effect from AY 2023-24
- TDS on payment of accumulated balance due to an employee
It is proposed to omit the 2nd provision to Section 192A of the act so that in case of failure to furnishing PAN by the person relating to payment of accumulated balance due to him, tax will be deducted at 20% and not at MMR rate with effect from AY 2023-24
- TDS credit for income already disclosed in the return of the past years
It is proposed to insert new sub Section 20 in Section 55 of the Act, where any income has been included in the return of income of any assessment year and the TDS on such income is paid in a subsequent financial year, the assesse can make application to the AO within 2 years from the end of the financial year on which such tax was deducted, further credit of such tax deducted at source shall not be allowed in any other AY. This applies with effect from 01-10-2023.
- Relief from special provision for higher rate of TDS/TCS for non-filers of Income Tax Returns
There may be certain persons who are not required to furnish the return of income. It is not the intention such persons in the category of non-filers. Hence, to provide relief in such cases it is proposed to amend the definition of the Specified person in Section 206AB and 206CCA of the Act to exclude a person who is not required to furnish the return of income for the AY relevant to the PY with effect from 1-04-2023.
- Clarification on advance tax while filing updated return
In order to clarify the provisions of Section 140B(4) of the Act the amendment has been proposed in the said sub-Section that interest payable u/s 234B shall be computed on an amount equal to the assessed tax as reduced by the amount of advance tax, the credit for which has been claimed in the earlier return if any.
- Rationalisations of provisions of charitable trust and institutions
Amendments have been proposed with respect to depositing back of corpus and repayment of loans or borrowings, treatment of donation to another trust, time limit for furnishing the form for accumulation if income and tax audit report, removal of certain funds from Section 80G etc. The same has been dealt with in a separate article “BUDGET 2023 -Amendments to Provisions of Charitable Trust and Institutions”
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