Industry Benefit Highlights
MSMEs: Enhanced limits for micro enterprises & professionals to avail benefits of presumptive taxation ; 95% of receipts to be non cash. Deduction on payments made to MSME to be allowed only when payment is actually made.
Startups : Extension of the date of incorporation by 1 year for income tax benefits to start ups. Benefit of carry forward of losses on change of shareholding of start ups from 7 years of incorporation to 10 years.
Rationalisation: Income of authorities, boards, & commissions set up by the statue of Union or States to be exempt from income tax in certain sectors. Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31st March 2025.
Other Benefits:
- Expanded Corpus under a revamped scheme to enable additional collateral free guaranteed credit to MSME of ₹ 2 lacs crores.
- Enhanced maximum deposit limit for senior citizens savings schemes from ₹ 15 lacs to ₹ 30 lacs.
Direct Tax Proposals under Union Budget 2023
MSME and Professionals: Increasing threshold limit for presumptive taxation scheme
|
Existing Provision |
New Provision |
| The existing provisions of section 44AD and 44ADA provides presumptive taxation benefits to the assessee having turnover and gross receipts of Rs. 2 crores and Rs.50 lacs respectively. | It has now been proposed to enhance the threshold limit availing benefit of presumptive taxation, i.e., section 44AD and 44ADA to Rs. 3 crores and Rs. 75 Lacs respectively subject to cash receipts up to 5%. |
| Payments to MSME are being allowed on accrual basis. | It has now been proposed to cover the payment to MSME w.e.f. 1st April, 2024 under section 43B. |
Co-operatives & Other Government Bodies:
- Extending 15% corporate tax benefit to new cooperatives, commencing manufacturing till 31st March 2024.
- Higher limit of rupees 2,00,000 per member for deposit and loans in cash by PACS and PCARDBs.
- Higher limit of rupees three crore for TDS on cash withdrawal for cooperative societies.
- And opportunity to sugar cooperatives to claim payments made to sugar cane farmers for the period prior to assessment year 2016-17 as expenditure. This is expected to provide them with the relief of almost Rs.10,000 crore.
Start-ups:
- Extension of the date of incorporation by one year for income tax benefits to start-ups from 31st March 2023 to 31st March 2024.
- Benefit of carry forward of losses on changes of shareholding of start-ups from seven years of incorporation to 10 years.
Better targeting of tax concessions:
- It is proposed to cap deduction from capital gains on investment in residential house under section 54 and 54F Rs. 10 crores.
- In order to curb misuse, it is proposed to tax income from insurance policies (other than ULIP for which provisions already exist) having premium or aggregate of premium above Rs. 5 Lakhs in a year income is proposed to be exempt if received on the death of the insured person. This income shall be taxable under the head income from other sources. deduction shall be allowed for premium paid if such premium has not been claimed as deduction earlier the proposed provisions will apply for policies issued on or after first April 2023.
Rationalization:
- Income of authorities, boards and commissions set up by statutes of the union or state for the purpose of housing, development of cities, towns and villages and regulating or regulating and developing an activity or matter is proposed to be exempted from income tax.
- Removing the minimum threshold of Rs. 10,000 for TDS and clarifying taxability relating to online gaming.
- Not treating conversion of gold into electronic gold receipts and vice versa as capital gain.
- Reducing the TDS rate from 30% to 20% on taxable portion of EPF withdrawal in non-PAN cases.
- It is proposed to insert a new section 50AA in the Act to treat the transfer or redemption or majority of the “Market link debentures” as capital gain arising from the transfer of short-term capital asset.
Personal Income Tax:
- It is proposed to increase the rebate limit to Rs. 7,00,000 in the new tax regime. Thus, persons in the new tax regime with income up to Rs. 7,00,000 will not have to pay any tax. Currently those with income up to 5,00,000 do not pay any income tax in both old and new tax regimes.
- Slab rates under “New Tax Regime” is also proposed to be changed as hereunder:
| Existing Slab | Proposed Slab | Tax Rate |
| Rs. 0-2.5 Lakh | Rs. 0-3 Lakh | Nil |
| Rs. 2.5-5 Lakh | Rs. 3-6 Lakh | 5% |
| Rs. 5-7.5 Lakh | Rs. 6-9 Lakh | 10% |
| Rs. 7.5-10 Lakh | Rs. 9-12 Lakh | 15% |
| Rs. 10-12.5 Lakh | Rs. 12-15 Lakh | 20% |
| Rs. 12.5-15 Lakh | – | 25% |
| Above 15 Lakh | Above 15 Lakh | 30% |
- It is proposed to extend the benefit of standard deduction to the new tax regime to each salaried person with the income of Rs. 15.50 lakh or more will thus stand to benefit by Rs. 52,500.
- It is proposed to reduce the higher surcharge rate from 37% to 25% in the new tax regime resulting in reduction of the MMR to 39% from 42.74%.
- It is proposed to increase the limit of tax exemption on leave encashment on retirement to Rs. 25 Lakh from Rs. 3 Lakh for non-government salaried employees.
- It is also proposed to make the new income tax regime as the default tax regime. However, citizen will continue to have the option to avail the benefit of the old tax regime.
Other Major Proposals:
- It is proposed to deploy 100 Joint commissioners for disposal of small appeals to reduce the pendencies of such appeals.
- Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31.03.2025;
- Decriminalisation under section 276A of the Income Tax Act;
- Allowing carry forward of losses on strategic disinvestment including that of IDBI Bank; and
- Providing EEE status to Agniveer Fund.
- It is proposed to enhance the maximum deposit limit for Senior Citizen Saving Scheme from Rs. 15 Lakh to Rs. 30 Lakh.
- It is proposed to enhance the maximum deposit limit for monthly income account scheme from Rs. 4.5 Lakh to Rs. 9 Lakh for single account and from Rs. 9 Lakh to Rs. 15 Lakh for joint account.
- Mahila Samman Bachat Patra– A one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility upto Rs. 2 Lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.
Indirect Tax Proposals
Green Mobility:
- It is proposed to exempt excise duty on GST paid compressed bio gas contained in it.
- It is proposed to exempt the custom duty on import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
Electronics:
- It is proposed to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year.
- It is proposed to reduce the basic customs duty on parts of open cells of TV panels to 2.5 per cent used in manufacture of televisions.
Electrical:
- It is proposed to increase the basic custom duty on electric kitchen chimney from 7.5% to 15%.
- It is proposed to reduce the basic custom duty on heat coils from 20% to 15%.
Chemicals and Petrochemicals:
- It is proposed to exempt the basic custom duty on denatured ethyl alcohol.
- It is proposed to reduce the basic custom duty on acid grade fluorspar and crude glycerin from 5% to 2.5% and 7.5% to 2.5% respectively.
Marine Products:
It is proposed to reduce the basic custom duty on key inputs for domestic manufacture of shrimp feed.
Lab Grown Diamonds:
It is proposed to reduce the basic custom duty on seeds used in the manufacture of lab grown diamonds.
Precious Metals:
- It is proposed to increase the import duty on silver dore, bars and articles made therefrom.
- It is also proposed to increase the import duty on articles made from gold and platinum.
Metals:
- It is proposed to exempt the basic custom duty on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode is being continued.
- Also, BCD of 2.5 % on Copper Scrap is being continued to ensure the availability of raw materials for secondary copper producers.
Compounded Rubber:
It is proposed to increase the basic custom duty on compounded rubber from 10 per cent to 25 per cent or Rs. 30/kg whichever is lower, at par with that on natural rubber other than latex, to curb circumvention of duty.
Cigarettes:
It is proposed to increase the National Calamity Contingent Duty (NCCD) on specified cigarettes by 16%.
Sectoral Proposals
Logistics:
One hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified. They will be taken up on priority with investment of Rs.75,000 crore, including Rs.15,000 crore from private sources.
Green Growth:
Keeping in view the Vision for “LiFE”, or Lifestyle for Environment and to spur a movement of environmentally conscious lifestyle. India is moving forward firmly for the ‘Panchamrit’ and net-zero carbon emission by 2070 to usher in green industrial and economic transition. This Budget builds on our focus on green growth.
- Green Hydrogen Mission:
> The National Green Hydrogen Mission is launched with an outlay of ` 19,700 crores to facilitates transition of the economy to low carbon intensity and to reduce dependence on fossil fuel imports.
> Target is to reach an annual production of 5 MMT by 2030.
- Energy Transition:
It is proposed to provide Rs.35,000 crore for priority capital investments towards energy transition, net zero objectives and energy security by “Ministry of Petroleum & Natural Gas”
- Energy Storage Projects:
> Battery Energy Storage Systems with capacity of 4,000 MWH will be supported with Viability Gap Funding.
> A detailed framework for Pumped Storage Projects will also be formulated.
- Renewable Energy Evacuation: It is proposed to construct an Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh with and investment of Rs. 20,700 crore (including central support of Rs. 8,300 crore).
- Green Credit Programme: To be notified under Environment (Protection) Act to incentivized sustainable actions.
- PM-PRANAM: It is proposed to launch a PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth to incentivize States and UT to promote alternative fertilizers and balanced use of chemical fertilizers.
- GOBARdhan scheme (Galvanizing Organic Bio-Agro Resources Dhan):
It is proposed to set up 500 new ‘waste to wealth’ plants under GOBARdhan scheme will be established for promoting circular economy with a total investment of Rs. 10,000 crores.
- Bhartiya Prakritik Kheti Bio-Input Resource Centres: Over the next 3 years, 1 crore farmers will be facilitated to adopt natural farming. For which, It is proposed to setup 10,000 Bio-Input Resource Centres, national-level distributed micro-fertilizer and pesticide manufacturing network.
- Sustainable Ecosystem Development:
Ø MISHTI (Mangrove Initiative for Shoreline Habitats & Tangible Incomes) will be taken up for mangrove plantation along the coastline and on salt pan lands.
Ø Amrit Dharohar A scheme that will be implemented over the next three years to encourage optimal use of wetlands, and enhance bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities. The total number of Ramsar sites in our country has increased to 75 from 26.
- Coastal Shipping: Promoted as the energy efficient and lower cost mode of transport, both for passengers and freight, through PPP mode with viability gap funding.
Authors: CA Deepak Kumar | CA Kriti Sethi | CA Apoorva Maheshwari | CA Shivani Sharma | Radhika Singhal
Author Bio
Section 80ttb:
Whether above section deduction is made available for pensioners in the new tax regime.
2. Std deduction. Whether pensioners with income less than 15.5 lakhs are eligible for standard deduction.