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Direct Tax Proposals in Union Budget 2023
|
S. No |
Section | Description | Existing Provisions | Proposed Provisions |
| 1. | 44AD | Computation of Profits in case of Business under presumptive basis | Under the existing provisions the assessee can claim the benefit of presumptive basis, if its aggregate turnover during the previous year does not exceeds Rs 2 crores. | The provisions have been proposed to be amended which provides that the assessee can claim the benefit under presumptive scheme if its turnover during the previous year does not exceeds Rs 3 crores. Subject to the conditions that 95% of the receipts must be through online channels. |
| 2. | 44ADA | Computation of Profits in case of Profession under presumptive basis | The assessee can claim the benefit under presumptive scheme if its aggregate turnover during the previous year does not exceeds Rs 50 lakhs. | The provision under this section is proposed to be amended to provide that the assessee can claim the benefit under presumptive scheme if its aggregate turnover during the financial year does not exceeds Rs 75 lakhs. Subject to the conditions that 95% of the receipts must be through online channels. |
| 3 | 194N | TDS on Cash withdrawals | The section provides that where the banking company or the cooperative society engaged in carrying on the business of banking or the post office which is responsible for any sum to any person shall at the time of payment shall deduct tax at the applicable rate at the time of payment if the withdrawal during the previous year exceeds Rs 1 crores. | The section is proposed to be amended by inserting a new provision, which provides that if the recipient is cooperative society the amount of withdrawal shall increase to Rs 3 crores. |
| 4 | 54 | Exemption from Capital gains in case of sale of residential property and purchase of another residential property | The existing provisions allows deduction on capital gains arising from transfer of long term capital asset being residential property and purchase of another residential within a period of one year before and two years after and constructed a new residential property within a period of three years from the date of transfer. | The provisions under this section have been proposed to be amended to provide that where the cost of new residential property is more than Rs 10 cores then the amount in excess of Rs 10 crores shall be ignored for the purpose of computation of capital gain. |
| 5 | 54F | Exemption of Capital gains in case of sale of any other capital asset and purchase of residential property | The existing provisions allows deduction on capital gains arising from transfer of any long term capital asset and purchase of another residential within a period of one year before and two years after and constructed a new residential property within a period of three years from the date of transfer. | The provisions under this section have been proposed to be amended to provide that where the cost of new residential property is more than Rs 10 cores then the amount in excess of Rs 10 crores shall be ignored for the purpose of computation of capital gain |
| 6 | 10(10AA) | Exemption in case of leave encashment | The existing provisions provides that if a person is employed in the private sector, the leave encashment following retirement or resignation is taxable under the head salary after the exemption of Rs 3 lacs. | The provisions have been proposed to be amended to provide that the exemptions under the above provisions have been increased to Rs 25 lacs from Rs 3 lacs. |
| 7 | 79 | Carry forward and set off the losses in case of eligible set of losses. | The existing provision under section 79 provides that the in case of eligible startup, the losses can be carried forward and set off, if all the shareholders as on the last day of the previous year, in which the loss was incurred continue to hold those shares on the last day of the previous year in which loss is set off subject to the condition that the loss must have been incurred within a period of 7 years from the date of incorporation of the company. | The period of 7 years have been extended to 10 years i.e. all the other conditions remaining same , the eligible startup can carry forward and set off loss , subject to the condition that the loss must have been incurred within a period of 10 years from the date of its incorporation. |
| 8 | 87A | Rebate of tax in case of certain individuals and HUF | Under the existing provisions the taxpayer who is an individual or HUF can claim rebate of Rs 12500 under the said section if his total income does not exceeds Rs 500000/- | The amended proposed provisions is as follows: –
1. Old regime: – Taxpayer being an individual or HUF can claim rebate of Rs 12500 if his total income does not exceed Rs 5,00,000/- 2. New Regime: – Taxpayer being an individual or HUF can claim rebate of Rs 25000/- if the total income does not exceeds Rs 7,00,000/- |
| 9 | 16 | Standard Deduction in case of salariedassesses and Pensioner | As per section 16(ia) there was standard deduction of Rs 50,000/- form the income from salary orpension if the assesee was opting to pay tax under old regime. No such deduction was available to the assessee opting to pay tax under new regime | The provisions have been proposed to be amended which provides as follows:-
Old Regime: – There is no change in respect of standard deduction. New Regime: – The benefit of Standard deduction of Rs 50,000 has been allowed in this regime for the first time. |
Other Proposed Changes
1. Major changes in the tax rates: –
| Old regime | New Regime | ||
| 0-250000 | Nil | 0-300000 | Nil |
| 250000-500000 | 5% | 300000-600000 | 5% |
| 500000-1000000 | 20% | 600000-900000 | 10% |
| Above 1000000 | 30% | 900000-1200000 | 15% |
| 1200000-1500000 | 20% | ||
| Above 1500000 | 30% |
2. Reduction of TDS rate on EPF withdrawal
Tax deduction on EPF withdrawal has been proposed to be reduced to 20% from 30%
3. Taxability of Life insurance proceeds
Life insurance policies issued on or after 01st April 2023, the tax exemption on maturity benefit shall be available to the assessee if the aggregate premium paid during the previous year is up-to Rs 5 lacs.
4. Reduction in Surcharge Rate
The highest surcharge rate have been reduced to 25% from 37% for the people earning more than Rs 5 cores. The benefit is available to the assessee opting to pay tax under new regime.
5. New Manufacturing benefit to cooperative society: -Concessional tax rate of 15% is proposed to cooperative societies that commences manufacturing by 31st March 2024.
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