Budget Proposal 2023 – Some Important Amendments in Direct Tax

Proposed Direct Tax Amendments in Union Budget 2023

1. Sec 9(1)(viii) – Earlier for taxability purpose Gift exceeding Rs. 50,000, received by non-resident without consideration from a person resident in India shall be income deemed to accrue or arise in India, now the provision of this section extended to not ordinary resident in India. In simple words gift received by not ordinary resident from resident shall also be taxable.

2. Sec 10(10D) – if the premium on Life Insurance Policy issued on or after 1^st April, 2023, exceeds 5 Lakh, the sum received on maturity, now will be taxable u/s 56(2)(xiii), except in case of death.

3. Sec 10(12C) – Any payment from Agniveer Corpus Fund to person as mentioned in Agnipath scheme or his nominee, shall be exempt.

4. Sec 10(22B) – the income of news agency shall be now taxable from the A.Y. 2024-25. Earlier it was exempt subject to certain conditions.

5. Sec 10(23C)/Sec 11 – Amount withdrawn from corpus fund for incurring expenditure will not be treated as application of money until the said amount deposited back to such corpus fund within a period of 5 years.

6. Sec 17 – New Clause (ix) inserted for contribution made by CG to Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in sec 80CCH.

7. Sec 43B – Any Sum Payable by the assessee to micro or small enterprises beyond the time limit (45 days) shall be allowed on actual payment basis.

8. Sec 44AD – where the aggregate of amount received in cash during the year does not exceed 5% of total turnover or gross receipts of such P.Y. the limit of turnover or gross receipts is extended from “2 crore” to “3 Crore”.

9. Sec 44ADA – where the aggregate of amount received in cash during the year does not exceed 5% of the total gross receipts of such P.Y. the limit of gross receipts is extended from “50 Lakh” to “75 Lakh”.

10. Sec 44BB – If any assessee declare profit as a percentage, mentioned in sec 44BB, cannot set off unabsorbed depreciation and brought forward losses for such P.Y.

11. Sec 44BBB – If any assessee declare profit as a percentage, mentioned in sec 44BBB, cannot set off unabsorbed depreciation and brought forward losses for such P.Y.

12. Sec 48 – For the purpose of calculation of Capital Gain, cost of acquisition & cost of improvements shall not include interest cost for which deduction claimed already u/s 24 or chapter VIA.

13. Sec 50AA – Market Linked Debentures – Any Capital gain arising on Market linked debentures shall be deemed as Short Term.

14. Sec 54/54F – If Capital gain is more than 10 Crore then deduction for Capital Gain restricted to 10 Crore.

15. Sec 56(2)(xii) – any sum received by unit holder from a business trust, is taxable under this section. (Sum received – cost of acquisition)

16. Sec 80CCH – Deduction in respect of any contribution by assessee or CG to the Agniveer Corpus Fund, shall be allowed to assessee in computation of his total income.

17. Sec 80-IAC – Deduction in respect of startup scheme under this section is extended to A.Y. 2024-25.

18. Sec 87A – In case of new tax regime (section 115BAC), assessee can claim rebate under this section if income is not exceeding Rs. 7 Lakh, to the extend the amount of tax or Rs. 25,000, whichever is lower.

19. Sec 115BAC – Income tax slab rate under new scheme has been changed as follows

Where the income of person is chargeable to tax u/s 115BAC(1A), the rate of surcharge shall not exceed 25%. (i.e., max rate of surcharge is 25%)

Under new scheme, salaried employee can also take benefit of Rs. 52,500 as standard deduction.

New Scheme is now default scheme, if you want to go to old scheme then you have to opt for, filing form as defined. And if you take new scheme once you cannot opt for old scheme. (w.e.f. A.Y. 2024-25)

20. Sec 115BAE – Tax on certain new manufacturing co-operative societies may be computed at the option of assessee @ 15% subject to certain conditions, from A.Y. 2024-25.

21. Sec 115BBJ – for the purpose of taxability of winning from online games new section has been inserted, in this section income from online game has been taxable @ 30%.

22. Sec 148 – for the assessment u/s 147, A.O. shall serve notice to furnish information within “such period as may specified in such notice”, now after amendment this period as defined as “a period of three months from the end of month in which such notice issued, or such further period as may be allowed by A.O. on the basis of an application made in this regard by the assessee.”

24. Sec 194BA – TDS to be deducted by any person responsible for paying to any person any income by way of winning from online game, at the end of the financial year at the rates in force (i.e. 30%)

25. Sec 194N – The limit of withdrawal of cash is extended from “2 Crore” to “3 crore” in case where recipient is Co-operative society, i.e., no TDS will be deducted upto 3 crore.

26. Sec 206C(1G) – TCS rate is changed from 5% to 20%. Authorised dealer (AD) receive amount for remittance out of India under Liberalised Remittance Scheme and seller of overseas tour program package, shall also collect TCS @ 20%. If the amount is remitted for the purpose of education and medical treatment upto Rs. 7 Lakh, no TCS will be collected. In Excess of 7 Lakh, TCS @ 5% shall be collected.

27. Sec 269SS – the Limit of Rs. 20,000 is extended to Rs. 2 Lakh only in case “if deposit is accepted by a primary agriculture society or primary co-operative agriculture and rural development bank from its members” or “loan is taken from a primary agriculture society or primary co-operative agriculture and rural development bank by its members.

28. Sec 269T – the Limit of Rs. 20,000 is extended to Rs. 2 Lakh only in case “if deposit is paid by a primary agriculture society or primary co-operative agriculture and rural development bank from its members” or “loan is repaid to a primary agriculture society or primary co-operative agriculture and rural development bank by its members.

The leave encashment for non-government employees is exempt up to a certain limit. This limit was Rs.3 lakh since 2002 and is now increased to Rs.25 lakh owing to the general increase in income from salary.

In case of donation by one trust to another trust, only 85% of eligible donation shall be treated as application.